In Bruce Berkowitz of the Fairholme Fund put 18% of his portfolio into AIG. Investors should have been paying attention as it subsequently. FORTUNE — With AIG stock cratering nearly 50% this year, all eyes have turned to investor Bruce Berkowitz, AIG’s largest private shareholder. Bruce Berkowitz (Trades, Portfolio): As we have written in all of our letters, we bought AIG at substantial discount to tangible book value.

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Aiig AIG paid off handsomely, the performance of Berkowitz’s fund has been, shall we say, mercurial. He, therefore, tends to hold highly concentrated portfolios — in his positions in Fannie Mae and Freddie Mac made up 36 percent of the fund. He moved to London in to join Merrill Lynch.

How Bruce Berkowitz stumbled with AIG

AIG is taking to the road this week to entice prospective investors. Why he turned out to be wrong on the U. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at or visit www. Check out our H2 hedge fund letters here. This copy is for your personal, non-commercial use only. Send me ocassional third party offers Yes No. The Ideas section of finbox.

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Bruce Berkowitz is the founder and president of Fairholme Funds and a well-known value investor. For the best Barrons. He is not afraid to make regular xig to the portfolio as market conditions change.

Subscribe to ValueWalk Newsletter. Berkowitz bets on the jockey as much as on the horse; he looks for companies that are built to survive in any environment with strong management. Berkowitz is a contrarian investor and invests in companies with reliable cashflows that are trading at attractive levels relative to those cashflows.

Over five years, however, it’s in the bottom one percentile.

On the conference call with investors, Berkowitz ended his prepared remarks on AIG with a curious quote attributable to two value-investing luminaries. He founded Fairholme Capital in to manage a hedge fund. In he set up Fairholme Funds, which managed three mutual funds and acted as an investment advisor to long-only institutional funds. He then joined consulting firm Strategic Planning Institute.

The five positions above represent Qualifying assets include long positions in U. We’ve detected you are on Internet Explorer. Whether Brce is rehabilitated remains to be seen. And secondly, many value investors have struggled in a market fuelled by easy money which has favored momentum and growth stocks.


AIG headquarters office stands in New York. In he moved to Smith Barney Investment Advisors where he was a managing director. The stock has been pummeled recently after disappointing earning results and an unanticipated rise in expected insurance claims. All Rights Reserved This copy is for your personal, non-commercial use only. He often sticks with specific stocks for very long periods, brude that has also hurt performance.

How Bruce Berkowitz stumbled with AIG | Fortune

Barron’s Bill Alpert wrote, back inthat one oddball aug in particular was partly to blame for lackluster performance in recent years. The stock had been the fund’s largest holding, and, at times in recent years, comprised nearly half of the fund’s portfolio.

Berkowitz was mum on AIG AIG this year until yesterday, when the Wall Street Journal first reported that he took his lumps and told his investors in a conference call that he had made a critical error. Essentially, he looks for free cashflows that he can buy very cheaply.