AIG and Sears are treating Fairholme [profile] well. InvestmentNews digs into Bruce Berkowitz's big bets on the two stocks, or rather, it excerpts a fund-analysis newsletter by Litman Gregory in an attempt to explain why Fairholme Fund has gained over 30 percent this year through August.

Talking with the analysts is chance for Berkowitz to advocate for his fund and his fundamentals-based investing strategy.

"We've had two years of improving businesses," he tells InvestmentNews. He says that AIG, up 50 percent on the year, is doing so well that it "could be done with the government by the end of the first quarter of next year." Once the government is out, Berkowitz foresees investors returning to the insurer, which, he says, could push the stock price past $70 a share. It's currently in the low to mid 30s.

Berkowitz is also the second-largest holder of Sears stock, with 15 percent of the outstanding shares, according to InvestmentNews. It's up 90 percent this year, and Berkowitz says that the company's real estate holdings alone are enough to justify a higher stock price. 

Edited by: Chris Cumming


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