value-is-what-you-get Posted February 8, 2012 Posted February 8, 2012 It's on the Fairholme site now: http://www.fairholmefunds.com/videos.htm "These financial services companies are just dead center in what I believe to be my circle of competence and I've seen this Act before and I've seen the Play before I've seen this cycle before and you know how it plays out . . . I'm excited as I never thought I'd have another opportunity to take advantage of another cycle in financials" another interesting note is that MBIA is suing BAC and that the resulting settlement will likely be very meaningful financially for MBIA and is probably already more or less reserved for at BAC (not damaging in any meaningful way). with respect to Bank of America he says that at present it doesn't get any better for Value Investors with respect to the price you pay for what your getting and that the discrepency in price to value is due to the fact that generally investors are "tremendously overweight what recently happened to them in terms of pain and suffering and just forget about or tremendously underweight all of history"
Myth465 Posted February 8, 2012 Posted February 8, 2012 Berkowitz in fine form. What is Sears worth, well thats the $64 question. LOL.
Valuebo Posted February 8, 2012 Posted February 8, 2012 Seems like a lot of people are watching, takes forever to load!
QLEAP Posted February 8, 2012 Posted February 8, 2012 Seems like a lot of people are watching, takes forever to load! The transcript is at http://www.fairholmefunds.com/pdf/FairholmeInterviewTranscript.pdf
PlanMaestro Posted February 8, 2012 Posted February 8, 2012 We’re long-term investors, so let’s take this to an illogical extreme. Everyone leaves, I’m the last one left as a shareholder. And I end up with positions that are cheap, with billions of dollars of tax-deferred assets, and a great future. What I am trying to say is that for the long-term shareholder, the amount of redemptions should not matter. Could it potentially cause a lowering of price on a short-term basis? Yes. Do I think it has negatively affected short-term performance? No. I mean, there's a reason why we had $3 billion of cash that everyone was complaining about, and we utilized that cash for redemptions. We’ve had to take other actions, but we have a more focused portfolio, because of that. So it has been to the long-term good of those of our shareholders who are still here. I still have to prove it, but the next couple of years we’ll know. Amen.
hardincap Posted February 8, 2012 Posted February 8, 2012 The guy seems a bit deluded to me. He's done great with WFC in the past but to put 90% of your assets into financials is very asinine
T-bone1 Posted February 8, 2012 Posted February 8, 2012 We’re long-term investors, so let’s take this to an illogical extreme. Everyone leaves, I’m the last one left as a shareholder. And I end up with positions that are cheap, with billions of dollars of tax-deferred assets, and a great future. What I am trying to say is that for the long-term shareholder, the amount of redemptions should not matter. Could it potentially cause a lowering of price on a short-term basis? Yes. Do I think it has negatively affected short-term performance? No. I mean, there's a reason why we had $3 billion of cash that everyone was complaining about, and we utilized that cash for redemptions. We’ve had to take other actions, but we have a more focused portfolio, because of that. So it has been to the long-term good of those of our shareholders who are still here. I still have to prove it, but the next couple of years we’ll know. Amen. I think Berkowitz will be vindicated, but he did say previously that having $3 billion of cash on hand was something of a hedge in case the rest of his concentrated financial positions went down. I think he implied previously that this would be used to buy more or buy other cheap stocks if the market went down. It was prudent to keep this cash on hand and it did take care of the redemptions, but I don't think his comments on the cash then and now are entirely consistint. Either way, I think current FAIRX shareholders will do very well
Parsad Posted February 8, 2012 Posted February 8, 2012 The guy seems a bit deluded to me. He's done great with WFC in the past but to put 90% of your assets into financials is very asinine I like Berkowitz, but I agree with that sentiment. He's in the situation he is in, because he was so heavy in financials. I think it will work out, but it should be learning moment for him as well. Cheers!
PlanMaestro Posted February 8, 2012 Posted February 8, 2012 I like Berkowitz, but I agree with that sentiment. He's in the situation he is in, because he was so heavy in financials. I think it will work out, but it should be learning moment for him as well. Cheers! If you ask me, I am more skeptical of his non financials. The financials will work fine with or without Euro.
A_Hamilton Posted February 8, 2012 Posted February 8, 2012 Seems like a lot of people are watching, takes forever to load! I'm guessing he's not a Level 3 customer.
txlaw Posted February 8, 2012 Posted February 8, 2012 I like Berkowitz, but I agree with that sentiment. He's in the situation he is in, because he was so heavy in financials. I think it will work out, but it should be learning moment for him as well. Cheers! If you ask me, I am more skeptical of his non financials. The financials will work fine with or without Euro. I don't think his heavy concentration in US financials has been, or ever was, an issue in terms of pure portfolio management, given his investment style (focus investing), though certainly it had an effect on his investors' mentalities, which caused AUM to flow out. However, I do think his cash position was not enough to be running an open end mutual fund that was so concentrated in financials. At one point during the summer, Berkowitz noted that his cash position had gone way down, and that was a clear sign that he would be forced to sell off stock, which contributed to the rapid decline in those financials.
Valuebo Posted February 8, 2012 Posted February 8, 2012 The guy seems a bit deluded to me. He's done great with WFC in the past but to put 90% of your assets into financials is very asinine Thanks! Seems like a lot of people are watching, takes forever to load! I'm guessing he's not a Level 3 customer. Haha. ;D
Kraven Posted February 8, 2012 Posted February 8, 2012 I think Berkowitz will be vindicated, but he did say previously that having $3 billion of cash on hand was something of a hedge in case the rest of his concentrated financial positions went down. I think he implied previously that this would be used to buy more or buy other cheap stocks if the market went down. It was prudent to keep this cash on hand and it did take care of the redemptions, but I don't think his comments on the cash then and now are entirely consistint. Either way, I think current FAIRX shareholders will do very well I like Berkowitz a lot as well. I think in the past he viewed the excess cash as enabling him to do "special" deals, kind of like Buffett gets. That is, he wanted to be the guy who can swoop in and pick up a special AIG preferred or something at outrageous levels when they need "help". In addition, I think there was an implication that he wanted to engage in more principal like activity, kind of like what he did with JOE. All of this was a tall order for an open ended mutual fund and probably once again emphasizes why this may not have been the proper vehicle for him. But all will turn out well for Bruce in the end methinks.
hardincap Posted February 8, 2012 Posted February 8, 2012 im puzzled by people saying things will turn out well for Berko. He lost over 32% last year. To get back to breakeven, his fund has to move up 47%. If you really believe his fund will perform that well, you should be buying it hand over fist.
enoch01 Posted February 8, 2012 Posted February 8, 2012 im puzzled by people saying things will turn out well for Berko. He lost over 32% last year. To get back to breakeven, his fund has to move up 47%. If you really believe his fund will perform that well, you should be buying it hand over fist. ...or you could have bought / be buying the same securities hand over fist.
Parsad Posted February 8, 2012 Posted February 8, 2012 im puzzled by people saying things will turn out well for Berko. He lost over 32% last year. To get back to breakeven, his fund has to move up 47%. If you really believe his fund will perform that well, you should be buying it hand over fist. How much is he up already this year? Several of his positions have already risen 30%+ YTD, with AIG and MBIA holding him back in the two funds respectively. Berkowitz has wittled the fund down to incredibly concentrated positions. If he gets any traction on AIG and MBIA, it would be easy to see the funds rise 30% plus in 2012. Cheers!
BargainValueHunter Posted February 8, 2012 Posted February 8, 2012 Bruce's mistake was not doing enough to dissuade potential investors who saw his numbers in Money Magazine and just wanted in without knowing what value investing is. It is an open ended fund so he takes all comers but during interviews I think he should have emphasized the severe sector concentration and the potential danger to "return chaser types" for intense, if temporary, losses. Perhaps, if financials are his core competency, he should start a fourth fund called "Fairholme Financial Fund" and make the original a non-financial fund (which I guess would pretty much just be SHLD...maybe he could call it the "Fairholme Sears Holding Fund" lol). My respect has grown for him simply because he has stuck to his core value principles during a hellish period. How many other fund managers have that sort of conviction? I don't think he is going to be chasing AAPL and FB anytime soon!
PlanMaestro Posted February 8, 2012 Posted February 8, 2012 Bruce's mistake was not doing enough to dissuade potential investors who saw his numbers in Money Magazine and just wanted in without knowing what value investing is. It is an open ended fund so he takes all comers but during interviews I think he should have emphasized the severe sector concentration and the potential danger to "return chaser types" for intense, if temporary, losses. Perhaps, if financials are his core competency, he should start a fourth fund called "Fairholme Financial Fund" and make the original a non-financial fund (which I guess would pretty much just be SHLD...maybe he could call it the "Fairholme Sears Holding Fund" lol). My respect has grown for him simply because he has stuck to his core value principles during a hellish period. How many other fund managers have that sort of conviction? I don't think he is going to be chasing AAPL and FB anytime soon! Several good points, +2 then?
hardincap Posted February 8, 2012 Posted February 8, 2012 im puzzled by people saying things will turn out well for Berko. He lost over 32% last year. To get back to breakeven, his fund has to move up 47%. If you really believe his fund will perform that well, you should be buying it hand over fist. How much is he up already this year? Several of his positions have already risen 30%+ YTD, with AIG and MBIA holding him back in the two funds respectively. Berkowitz has wittled the fund down to incredibly concentrated positions. If he gets any traction on AIG and MBIA, it would be easy to see the funds rise 30% plus in 2012. Cheers! Great, 30% rise. Now that leaves you "only" 17% more to go just to break even.
Parsad Posted February 8, 2012 Posted February 8, 2012 im puzzled by people saying things will turn out well for Berko. He lost over 32% last year. To get back to breakeven, his fund has to move up 47%. If you really believe his fund will perform that well, you should be buying it hand over fist. How much is he up already this year? Several of his positions have already risen 30%+ YTD, with AIG and MBIA holding him back in the two funds respectively. Berkowitz has wittled the fund down to incredibly concentrated positions. If he gets any traction on AIG and MBIA, it would be easy to see the funds rise 30% plus in 2012. Cheers! Great, 30% rise. Now that leaves you "only" 17% more to go just to break even. I think the point is that those investors who sold anywhere near the bottom, just cost themselves 30%+ in returns to get them back up to break even. It's not Berkowitz's returns you should concern yourself with. Feel bad for the investor who sold out of fear and probably kept the funds in cash! Berkowitz will make his money and more over time. Cheers!
beerbaron Posted February 9, 2012 Posted February 9, 2012 I'm very important. I have many leather-bound books and my apartment smells of rich mahogany. I don't see the value of that comment. Can you precise what you mean? BeerBaron
hardincap Posted February 9, 2012 Posted February 9, 2012 I'm very important. I have many leather-bound books and my apartment smells of rich mahogany. Seriously, that creeped me out too. It makes me distrust Berkowitz a little more. The same type of distrust I'd have for a CEO that insists on furnishing his office with expensive furniture and decor.
merkhet Posted February 9, 2012 Posted February 9, 2012 They are referring to the background of the video.
Parsad Posted February 9, 2012 Posted February 9, 2012 Did you guys take a close look at the bookshelf? It's got all of his books on Buffett on there, including a copy of Securities Analysis and a couple of copies of "Of Permanent Value". The fact that he's got some leatherbound books on there means nothing, except that he's bought some leatherbound books and keeps them on his bookshelf in his office, and values them the same as his investing books...more admirable than anything else. Regardless, the presentation is what people should pay attention to. Cheers!
Munger_Disciple Posted February 9, 2012 Posted February 9, 2012 Did anyone understand Berkowitz's take on Sears? He says that it is worth multiples of its current price, but does not back up his thesis with any meaningful data. Similarly, he says BAC's normalized earning power is $4 per share(!) without any backup data. It must seem high for even extreme optimists on BAC.
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now