We recently published a list of Billionaire Bruce Berkowitz’s 6 Stock Picks with Highest Upside Potential. In this article, we are going to take a look at where Bank OZK (NASDAQ:OZK) stands against other billionaire Bruce Berkowitz’s stock picks with highest upside potential.
One of the most prominent hedge fund managers on Wall Street and founder of Fairholme Capital Management, billionaire Bruce Berkowitz’s track record and unique investing approach make his portfolio choices well worth a closer look. Berkowitz is renowned for his bold bets on unloved assets, his high-conviction investment style, and his rare ability to spot dollar bills being sold for pennies- and the guts to hold them until the market catches up.
His ability to focus on facts and ignore the market chatter has helped him deliver strong results and earned him strong accolades in the industry. Named Morningstar’s Domestic-Stock Fund Manager in 2009 and Institutional Investor Magazine’s Money Manager of the Year in 2013, his honors underscore his reputation as a value investor worth following.
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Berkowitz has always believed in owning a handful of stocks. These stocks, however, are those in which he believes deeply. After all, high-conviction investing is the name of the game.
“You only need a few ideas in a lifetime to do unbelievably well.”
-Bruce Berkowitz
He is also a staunch believer in reality. Hated assets usually have hidden value, and the trick, he believes, is to look at the facts instead of reacting to trauma like others do.
“Ignore the crowd. Count what matters.”
-Bruce Berkowitz
In an interview with Bill Brewster from the Business Brew, Bruce Berkowitz talked about how he started Fairholme with a simple mission: managing his family’s money. From the very beginning, Fairholme wasn’t a marketing organization. Rather, the fund’s unique approach was vested in value creation rather than asset gathering. Focusing solely on deep research and concentrated positions, Berkowitz often ran portfolios with only a few ideas.
Over the years, Berkowitz learned how financial metrics, on which he relied with much conviction in the early years, weren’t the only factors to consider. Rather, management quality and ownership culture were equally important. This shift in perspective has made him more selective as he strongly believes that the right leadership can make or break an organization, particularly during tough times. That said, Berkowitz highlighted in the interview how he now avoids doing business with executives he doesn’t trust, regardless of how shiny the financials may seem.
Moreover, Berkowitz’s investments are almost entirely US-focused. The sole reason for this strategy has been his commitment to deep understanding and control. According to him, sound investing requires a good grasp of the company’s regulatory environment, tax structure, supply chain, and other related factors. Building that level of expertise made him limit his universe to the US, where he is comfortably focused on a few three to six positions where he tries to fully understand the industry, the competitors, the suppliers, and more. According to him, the US is a sound market to operate in, especially for a value investor dreaming of capital appreciation and preservation.
“His aptitude for picking stocks sets him apart from his peers, and Fairholme’s portfolio is filled with attractively priced firms that generate high free cash flow. Berkowitz’s strategy has led to a stellar long-term record, and his large cash stakes have helped limit volatility.”
– Then director of mutual fund analysis for Morningstar, Karen Dolan, said of Berkowitz
For this list, we picked stocks from Fairholme Capital Management’s 13F portfolio as of the end of the fourth quarter of 2024. We listed them in the ascending order of analysts’ average upside potential, as of May 9. These equities are also popular among other hedge funds. The hedge fund data is as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An iconic skyline of a major city, the towering buildings display the strength of the company’s regional banking success.
Bank OZK (NASDAQ:OZK)
Fairholme Capital Management’s Stake: $28,650,699
Number of Hedge Fund Holders: 37
Average Upside Potential: 10.42%
Bank OZK is an Arkansas state-chartered bank that offers retail and commercial banking services in the United States. Of the concentrated 10 holdings in Bruce Berkowitz’s portfolio, Bank OZK is the sixth top pick with the highest upside potential.
The company recently reported its Q1 2025 earnings in April, offering a mix of strong operational performance, particularly in loan growth and strategic deposit cost management, as well as challenges posed by macroeconomic uncertainties and specific loan portfolio issues. The bank reported first quarter 2025 net income of $167.9 million, 2.1% lower compared to the year-ago period. Meanwhile, earnings per share for the bank were $1.47, beating the consensus estimate of $1.40. It reported strong loan growth in the first quarter, with a 3.8% increase not annualized.
Following the earnings report, Stephens’s analyst Matt Olney lowered the firm’s price target on the stock to $54 from $59 and kept an “Equal Weight” rating on the shares. The firm believes that disclosures related to the bank’s Real Estate Specialties Group (RESG) appraisals are likely to boost investor confidence about the bank’s financial health. The analyst further revealed how its updated forecast includes a modest upward revision in the bank’s earnings per share (EPS) and pre-provision net revenue.
Overall, OZK ranks 6th on our list of billionaire Bruce Berkowitz’s stock picks with highest upside potential. While we acknowledge the potential of OZK as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than OZK but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
