BargainValueHunter Posted August 4, 2011 Share Posted August 4, 2011 The Fairholme press release is really unusual. http://www.fairholmefunds.com/pdf/bacpressrelease.pdf Didn't Bruce B. do this with Pfizer a couple of years back...then dump the shares a quarter later? Link to comment Share on other sites More sharing options...
ShahKhezri Posted August 4, 2011 Share Posted August 4, 2011 He did, but different logic. PFE was sold because of recurring non-recurring items. Link to comment Share on other sites More sharing options...
txlaw Posted August 4, 2011 Share Posted August 4, 2011 The Fairholme press release is really unusual. http://www.fairholmefunds.com/pdf/bacpressrelease.pdf Didn't Bruce B. do this with Pfizer a couple of years back...then dump the shares a quarter later? He did. Vinod pointed that out above. His stated rationale for dumping PFE was because of recurring non-recurring items. I'm not sure I buy that. It's possible that he realized his jockey, Kindler, either wasn't going to be there much longer or was not who Berkowitz thought he was. Did you guys see the recent article on Kindler's ouster? Link to comment Share on other sites More sharing options...
JAllen Posted August 4, 2011 Share Posted August 4, 2011 Y'all seem to be criticizing his decision to sell a stock because it seemed to coincide with a management interview. I don't get it. Link to comment Share on other sites More sharing options...
Rabbitisrich Posted August 4, 2011 Share Posted August 4, 2011 It's amazing that this news didn't receive more attention, but in the week ending Tuesday money market investors withdrew 3.9% of total funds: http://www.latimes.com/business/la-fi-money-market-20110804,0,1331360.story Link to comment Share on other sites More sharing options...
Parsad Posted August 4, 2011 Share Posted August 4, 2011 Institutional guys are the first to pull their money. So much for being professionals! Cheers! Link to comment Share on other sites More sharing options...
txlaw Posted August 4, 2011 Share Posted August 4, 2011 Y'all seem to be criticizing his decision to sell a stock because it seemed to coincide with a management interview. I don't get it. Well, Berkowitz seemed to indicate that he was bullish on Pfizer for the long term for several reasons, one of which was that he thought the market was misjudging Kindler and the effect that Kindler would have on capital allocation/strategy at Pfizer. Then he completely sold out of PFE. Totally weird. I've always defended Berkowitz on his most controversial calls (JOE, BAC, MBIA, AIG) because I have always thought he was right. He may have been wrong, though, about Pfizer, at least with respect to Kindler. Link to comment Share on other sites More sharing options...
PlanMaestro Posted August 4, 2011 Share Posted August 4, 2011 I've always defended Berkowitz on his most controversial calls (JOE, BAC, MBIA, AIG) because I have always thought he was right. He may have been wrong, though, about Pfizer, at least with respect to Kindler. You cannot be right about everything. And when facts change, like a CEO doing a mega merger and financing it by cutting the 10% dividend yield, ... Link to comment Share on other sites More sharing options...
txlaw Posted August 4, 2011 Share Posted August 4, 2011 I've always defended Berkowitz on his most controversial calls (JOE, BAC, MBIA, AIG) because I have always thought he was right. He may have been wrong, though, about Pfizer, at least with respect to Kindler. You cannot be right about everything. And when facts change, like a CEO doing a mega merger and financing it by cutting the 10% dividend yield, ... Absolutely. I agree. But Berkowitz has never said that he was wrong about Kindler, and that irks some people (not me) based on comments about Berkowitz on other threads. In fact, I would not be surprised if long time investors with Berkowitz who have recently left feel that he is refusing to acknowledge that he is wrong about JOE. I would argue that he probably does not think he's wrong about JOE and is not letting his analysis be colored by the fact that Fairholme has gone all in on JOE. But some people seem to believe that. What I'm suggesting is that Berkowitz should probably explain once and for all, in a definitive manner, why he sold out of PFE and what he thinks of Kindler, given the fact that he brought Kindler onto a Fairholme conference call. Was it really the recurring non-recurring expenses and tax rates that caused him to dump PFE or the mega merger initiated by Kindler that seemed to have taken him by surprise? Did he change his mind about the jockey? The reason I want him to explain this in a definitive manner is because I think he should be CIO of Berkshire. And so he needs to engender confidence in his investors. Link to comment Share on other sites More sharing options...
Rabbitisrich Posted August 5, 2011 Share Posted August 5, 2011 TxLaw, it's tough to contest your complaints, but Moynihan seems more competent and self-assured than the ex St. Joe and Pfizer CEOs. He lost a bit of credibility on the street by misreading the SIFI buffer discussion, but otherwise he has been doing a fine job. In the Pfizer, I had the impression that Berkowitz heard what he wanted to hear, and that Kindler simply agreed with some comments regarding generics without committing to specific plans and timelines. I suspect that the upcoming call with Moynihan will feature more specific plans and clear explanations of recent developments and strategies regarding capital buffers, loss development, counterparty risks, and dilution. Link to comment Share on other sites More sharing options...
PlanMaestro Posted August 5, 2011 Share Posted August 5, 2011 Txlaw, Running a hot mutual fund without any lock-ups probably makes it too difficult for B.Berkowitz to recognize errors so openly. And especially under the current circumstances. I agree with you that it would be nice to know and that he would be a great fit for Berkshire. But can he? I suspect that the upcoming call with Moynihan will feature more specific plans and clear explanations of recent developments and strategies regarding capital buffers, loss development, counterparty risks, and dilution. Rabbitisrich, don't you think that probably the only real question for Moynihan is the Europe exposure? Especially French and German banks including derivatives. Most of the other stuff seems very manageable and known. Link to comment Share on other sites More sharing options...
BargainValueHunter Posted August 5, 2011 Share Posted August 5, 2011 It's amazing that this news didn't receive more attention, but in the week ending Tuesday money market investors withdrew 3.9% of total funds: http://www.latimes.com/business/la-fi-money-market-20110804,0,1331360.story Want to talk about a set-up for some hardcore indiscriminate liquidation??? http://www.zerohedge.com/news/and-what-will-soon-be-scariest-chart-presenting-record-low-mutual-fund-cash-levels Here is a chart of what could well be the biggest concern for the market, and one we have been highlights for a long time: mutual fund cash levels, which as ICI indicates were 3.4% in June, is the lowest ever. A 4% drop in the absolute value of mutual fund investments, effectively wipes out the capital buffer of most. Enter liquidations. Indiscriminate Liquidation is the sweetest nectar for value investors! Link to comment Share on other sites More sharing options...
biaggio Posted August 5, 2011 Share Posted August 5, 2011 Thanks for the info Rabbit + BargainValue. Do you think those program/high frequency/computer traders or have this facts in their algorithms + will be liquidating, selling short etc piling onto the other macro issues? Does not look too good. Link to comment Share on other sites More sharing options...
rranjan Posted August 5, 2011 Share Posted August 5, 2011 Txlaw - I remember him saying recurring non-recurring expenses of PFE was the main reason. I don't know when so can not help with link. Link to comment Share on other sites More sharing options...
JAllen Posted August 5, 2011 Share Posted August 5, 2011 Indiscriminate Liquidation is the sweetest nectar for value investors! I Love this! (but hope it doesn't happen to Bruce!) Link to comment Share on other sites More sharing options...
Rabbitisrich Posted August 5, 2011 Share Posted August 5, 2011 Rabbitisrich, don't you think that probably the only real question for Moynihan is the Europe exposure? Especially French and German banks including derivatives. Most of the other stuff seems very manageable and known. I don't question the depository business much. September 2008 was a great test of the franchise, and the deposit performance was excellent in the states, and manageable in foreign offices. Link to comment Share on other sites More sharing options...
txlaw Posted August 5, 2011 Share Posted August 5, 2011 TxLaw, it's tough to contest your complaints, but Moynihan seems more competent and self-assured than the ex St. Joe and Pfizer CEOs. He lost a bit of credibility on the street by misreading the SIFI buffer discussion, but otherwise he has been doing a fine job. In the Pfizer, I had the impression that Berkowitz heard what he wanted to hear, and that Kindler simply agreed with some comments regarding generics without committing to specific plans and timelines. I suspect that the upcoming call with Moynihan will feature more specific plans and clear explanations of recent developments and strategies regarding capital buffers, loss development, counterparty risks, and dilution. I bet you're right. Moynihan seems like a stand-up guy. Link to comment Share on other sites More sharing options...
txlaw Posted August 5, 2011 Share Posted August 5, 2011 Txlaw, Running a hot mutual fund without any lock-ups probably makes it too difficult for B.Berkowitz to recognize errors so openly. And especially under the current circumstances. I agree with you that it would be nice to know and that he would be a great fit for Berkshire. But can he? Good point. Certainly, he can't do so now, being close to fully invested, and having such an increased profile. It would be nice at some point to get the full story, though. Link to comment Share on other sites More sharing options...
txlaw Posted August 5, 2011 Share Posted August 5, 2011 Txlaw - I remember him saying recurring non-recurring expenses of PFE was the main reason. I don't know when so can not help with link. Yeah, he mentioned that and the inordinately low taxes that pharma pays in a Morningstar interview. I'm just not convinced about the recurring non-recurring expenses explanation. I figure he would have already known this. I guess it's possible that he was worried about the risk that the tax code would be changed to remove the tax benefits that Pfizer currently enjoys. Who knows, though? Link to comment Share on other sites More sharing options...
bargainman Posted August 6, 2011 Share Posted August 6, 2011 First of all I don't pay Bruce to explain every investment he makes to me and everyone else in detail and in a public forum. I pay him to make the risk/reward calls and do the research, so I don't care if he explains why he sold PFE or not. He bought it when it was selling for a 6/7 PE if I remember right, they had a AAA balance sheet with a ton of cash, everyone thought healthcare was going down the tubes. The risk reward was right. He never said there wasn't anything wrong with PFE, but I'm sure he knows in private was is wrong with every investment he makes. He uses the public forums to try to communicate with his shareholders, and that's great, but I don't that's his job. His job is to make the investments. Link to comment Share on other sites More sharing options...
berkshiremystery Posted August 8, 2011 Share Posted August 8, 2011 Institutional guys are the first to pull their money. So much for being professionals! Cheers! Sanjeev,... these days remind me of 2003 and FFH, the worse the news, the greater a bargain BAC becomes. ;) I guess the smart money is always down after purchasing, this doesn't worry me, personally. IMHO, at almost 1/3 of book value (~$20 something book, currently trading around $7), BAC represents one of the biggest undervalued long term treasures of all the big cap companies. I give a thumbs up to all of us that are long BAC ;D AIG sues BofA for $10 billion alleging "massive fraud" On Monday August 8, 2011, 10:16 am EDT http://finance.yahoo.com/news/AIG-sues-BofA-for-10-billion-rb-2884649640.html?x=0&sec=topStories&pos=3&asset=&ccode=[/ Link to comment Share on other sites More sharing options...
frog03 Posted August 8, 2011 Share Posted August 8, 2011 I think the financials are in the too hard pile at this point. The incestuous relationships between broke governments and broke financial institutions. Berkowitz is certainly very smart but he probably felt to realize how stressed the system was/is before making his commitments to the financial sector this time around. Now, I have said this here before but compare the performance of Sprott and Berkowitz and there is no comparison over the last decade +... Link to comment Share on other sites More sharing options...
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