MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Tuesday, July 10, 2012 Fairholme's Roller-Coaster Ride Continues Bruce Berkowitz is down but not out. In fact, he is back on his feet, reports the Wall Street Journal. The paper takes a look at the Fairholme Fund [profile], which is up 24.7 percent so far this year after an awful 2011. But this isn't thanks to any change in strategy on the part of Berkowitz -- rather, it's due to swings in the stocks the fund is concentrated in, such as AIG and Bank of America. The Fairholme Fund was "a darling of investors during and following the bear market," losing less than the S&P 500 in 2008 and outgaining it in 2009 and 2010. But Berkowitz's luck turned in 2011, when the fund lost 32.4 percent while the S&P gained 2.1 percent on the year. Despite billions in outflows, the fund still holds $7.4 billion, according to Morningstar. Berkowitz's roller-coaster year-by-year performances "underscore the risks of investing in a concentrated fund" -- as of February, AIG accounted for 32 percent of the fund's assets. Berkowitz "tends to own things that have a lot of negativity associated with them," which means the fund "can be more volatile in the short term," explains Nick Smith, a PM at Steele Capital Management in Dubuque, Iowa. Nevertheless, the story notes that despite the Fairholme Fund's recent volatility, Berkowitz has a great track record over the last decade: 9 percent average return per year. Printed from: MFWire.com/story.asp?s=40563 Copyright 2012, InvestmentWires, Inc. All Rights Reserved |