American International Group Inc (AIG), Bank of America Corp (BAC): How Is Bruce Berkowitz Playing The Financials?

Berkowitz also decreased his stake in banking and financial services company Wells Fargo & Co (NYSE:WFC), with the fund reducing its existing stake by about a quarter to 151,400 shares worth about $5.6 million, as of March 31, 2013. Wells Fargo is still the 11th largest holding for the fund in terms of value, but the reduction in stake was an interesting move, given that Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.B) increased its position in the bank last quarter.

Wells Fargo & Co (NYSE:WFC)’s advantages in the home lending segment of the U.S. economy are obvious, but it’s this obviousness that draws most investors to the bank, as thoughts of an ongoing housing recovery immediately lead one to be bullish. Still, Berkowitz’s cut may be do to valuation concerns; Wells Fargo sports the fourth-highest sales multiple (4.5) in the money center banking industry, and the ninth-highest cash multiple (13.1).

Final thoughts

Berkowitz is a large and influential investor, with a bias towards value-oriented plays. His current equity holdings are largely weighted toward the financial sector, with financial services giants American International Group Inc (NYSE:AIG) and Bank of America Corp (NYSE:BAC) taking the top two spots. Cuts to his Wells Fargo and MBIA Inc. (NYSE:MBI) stakes are intriguing, but we’re particularly interested in Genworth Financial. The breakup value for this company might be much higher than shares are currently resting at, though this potential can only be unlocked if an Australian IPO does happen.

Disclosure: none