Bruce Berkowitz is pretty impressive for a mutual fund manager. We analyzed Berkowitz’s returns using Carhart’s 4-factor model and determined that Berkowitz had an average annual alpha of 3 percentage points per year. Usually mutual funds try to extract every drop of alpha in their successful strategies by expanding their assets and buying index stocks. They keep making money through management fees but their clients couldn’t enjoy any alpha for long periods of time. Berkowitz is different, that’s why we follow his moves.
Berkowitz filed his 13F form with the SEC this week and disclosed three new positions, one of which is truly new. Fairholme initiated a $614 Million position in Cisco during the first quarter. Fairholme also sold its entire $1.75 Billion GGP stake and initiated a $892 Million Brookfield Asset Management (BAM) position. Unfortunately Fairholme lost nearly $1 Billion because of the decline in AIG shares. This decline prompted Berkowitz to spend an additional $264 Million on AIG warrants.
Berkowitz also initiated 5 other new but very small positions in Telefonica (TEF), Eli Lilly (LLY), Bristol Myers (BMY), GlaxoSmithKline (GSK), and AstraZeneca (AZN). Fairholme sold out its stake in Humana (HUM), Wellcare Health Plans (WCG), and General Electric (GE).
Several hedge funds got rid of their CSCO bets during the first quarter as the company kept disappointing. David Tepper’s Appaloosa, Larry Robbins’ Glenview Capital, and Alan Fournier’s Pennant Capital sold their entire CSCO stakes. Phill Gross’ Adage reduce its holdings by nearly 10%. On the opposite side of the trade were Eddie Lampert and Whitney Tilson.
The table below provides a summary of Berkowitz’s portfolio activity during the first quarter: