Bruce Berkowitz Bet Billions on Unloved Stocks

The Fairholme Fund recently released a presentation called “Fairholme Stays the Course,” with the tag line, “Ignore the crowd.” In it, the Fairholme Fund explains its investing philosophy and the risks that come with it, specifically investing in unpopular and volatile companies. Point in fact, the Fairholme Fund’s largest holding at the end of the third quarter was American International Group (AIG).

FAIRHOLME (FAIRX) Bruce Berkowitz

The Fund has more than 27% of its portfolio invested in the insurance company. Bruce Berkowitz, the fund’s founder and manager, has been buying stock steadily in AIG for the Fairholme Fund since the first quarter 2010. He sold 1,682,774 shares in the third quarter 2011. AIG is trading at $21.88, near its 52-week low of $19.18 and down from a 52-week high of $62.87. It carries a one-year target estimate of $27.46, so enough to earn investors a 25% return if AIG reaches its target estimate. Despite the huge upside and a low P/E ratio of 4.97, analysts still give it only a 2.8 on a scale of 1.0 to 5.0 in which 1 is a strong buy and 5 means sell, and no wonder – it has a beta of 3.49, meaning it is roughly 3.5 times more volatile than the market.

See the other unloved stocks Bruce Berkowitz is betting his reputation on here.

Biotech Insider Alert - $5 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!