Bruce Berkowitz’s Portfolio and Latest Trades

Published on July 28, 2023 at 10:57 am by Swati Goyal in Hedge Funds, News

In this article, we discuss Bruce Berkowitz’s portfolio and latest trades. If you want to skip the detailed description of Bruce Berkowitz’s portfolio, check out Top 5 Stocks in Bruce Berkowitz Portfolio.

Nearly 28% of all billionaires in the world today are Americans. These individuals are drawn from different professions and industries, but a considerable number made their wealth from investing – Bruce Berkowitz is an apt example. Bruce Robert Berkowitz is a household name in the fund management sphere. Mr. Berkowitz is a Wall Street veteran who began his career in the consulting business. However, the investing career kicked off at the London office of Merryl Lynch in 1983, then, still in London, to Lehman Brothers. He ended employment at Smith Barney Investment Advisers, where he was the managing director, after which he established his own investment firm, Fairholme Capital Management, in 1997.

At Fairholme Capital Management, Berkowitz etched his name in the annals of Wall Street history. The firm manages several investment funds; the Fairholme (FAIRX) is the flagship. FAIRX is a non-diversified fund with interests in equity only. Fairholme Capital Management, and by extension, Berkowitz, is widely popular in the industry for the exploits in the noughties (or the twenty-o’s) of the 21st century. Between 1999 and 2010, Berkowitz’s investment fund returned 343% against the S&P500’s 5%.

Simply put, investors in the fund earned an average annual return of 14.5% (against the S&P500’s 0.5%) in this period. No wonder Morningstar, Inc. declared Berkowitz the Domestic-Stock Fund Manager of the Decade. The then director of mutual fund analysis for Morningstar, Karen Dolan, said of Berkowitz: “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.”

But the twenty-tens were unforgiving to the stock-picking guru so much that many began asking: what happened to Bruce Berkowitz? His performance stagnated after a series of bad investments, which cut the firm’s returns to single digit. Luckily, his bounce back did not take too long to happen. In 2020, Bruce Berkowitz Fairholme returned over 50% because a bet in one company went the right way. Since then, the legendary investor has been tinkering with the portfolio, adding, increasing, reducing, and selling off some stocks. However, the fund maintains a significant stake in St Joe Co. (NYSE: JOE), which gobbles up most of Bruce Berkowitz’s holdings, 83.08% as of the latest 13F filing. Also, the fund has been doing well for the past three years, which has seen Bruce Berkowitz’s net worth increase to $4.3 billion as of June 2023. But what changes has the billionaire investor made lately? What does the new portfolio look like? Read on to find out.

Methodology

We studied Fairholme (FAIRX)’s latest 13F filing for the first quarter of 2023 and noted the trades and the current shareholding. We also looked at how each stock was viewed by 943 hedge funds in our database at the end of the first quarter.

Bruce Berkowitz Portfolio and Latest Trades

11. Berkshire Hathaway, Inc. (NYSE:BRK.A)

Number of shares as of March 31, 2023: 1

Share of Fairholme portfolio as of March 31, 2023: 0.03%

Number of Hedge Fund Holders: 108

Like the Class B shares, Fairholme first bought into Berkshire Hathaway, Inc. (NYSE:BRK.A) in the sunset months of the Great Recession. Similarly, the fund cut a significant holding of the Class A shares (remained with six shares, down from 1,573) in Q1 2012. But while Berkowitz rebuilt the Class B stake, he held back from increasing the Class A stake beyond three, later exiting in Q1 2016. However, he bought back one share in Q2 2020, which the fund still holds.

The number of hedge funds tracked by Insider Monkey owning stakes in Berkshire Hathaway, Inc. (NYSE:BRK.A) fell to 108 in Q1 2023, from 110 in the previous quarter. These stakes have a consolidated value of over $12.61 billion.

10. Apple Inc. (NASDAQ:AAPL)

Number of shares as of March 31, 2023: 4,260

Share of Fairholme portfolio as of March 31, 2023: 0.05%

Number of Hedge Fund Holders: 131

Apple Inc. (NASDAQ:AAPL) is the only company in the world valued at more than $3 trillion. That Fairholme acquired AAPL shares before that remarkable achievement speaks volumes about Berkowitz’s aptitude for picking winning stocks. The investor initiated a position in Q3 2020 with 4,260 shares, which he later increased to 14,060 in Q2 2021, then cut back to 4,260 in Q1 2022. The stake remains at this level as of Q1 2023.

As of the end of the first quarter of 2023, Insider Monkey’s database indicates that 131 hedge funds, tracked by the platform, held stakes in Apple Inc. (NASDAQ:AAPL). The combined value of these hedge funds’ stakes amounted to $165.25 billion.

In its investor letter for the second quarter of 2023, Wedgewood Partners provided the following commentary regarding Apple Inc. (NASDAQ:AAPL):

“Apple Inc. (NASDAQ:AAPL) contributed to positive performance during the quarter despite declining revenues and operating earnings mostly driven by difficult comparisons in its Mac segment. iPhone sales grew as supply chain bottlenecks seem to be in the rearview mirror, with component prices falling. The Company also highlighted the torrid growth of its App Store ecosystem, which saw over $1.1 trillion in billings on the platform during 2022, more than double the billings in 2019. Apple has tremendous leverage across the mobile economy due to the App Store’s mission-critical relevance to both developers and users. We continue to hold Apple as a top weighting in the portfolio because this asset-light ecosystem drives sustainably high returns on invested capital.…” (Click here to read the full text)

9. Magellan Midstream Partners LP (NYSE:MMP)

Number of shares as of March 31, 2023: 28,600

Share of Fairholme portfolio as of March 31, 2023: 0.12%

Number of Hedge Fund Holders: 11

Magellan Midstream Partners LP (NYSE:MMP) is a new entrant in the Fairholme portfolio. MMP’s introduction makes Fairholme’s interest in the energy sector more prominent, indicating Berkowitz’s belief that this industry remains a crucial part of the global economy – of the 11 stocks in Fairholme’s portfolio, three operate in the energy industry. Fairholme acquired 28,600 MMP shares in Q1 2023. Interestingly, this move came two years after the fund ditched the company in Q4 2020.

At the end of Q1 2023, 11 hedge funds in Insider Monkey’s database reported having stakes in Magellan Midstream Partners LP (NYSE:MMP) with a total value of $24.79 million. With over 1.12 million shares, First Eagle Investment Management was Magellan Midstream Partners LP (NYSE:MMP)’s leading stakeholder in Q1.

8. Walgreens Boots Alliance Inc (NASDAQ:WBA)

Number of shares as of March 31, 2023: 74,000

Share of Fairholme portfolio as of March 31, 2023: 0.21%

Number of Hedge Fund Holders: 39

Walgreens Boots Alliance Inc (NASDAQ:WBA) is Fairholme’s sole interest in the healthcare market. The company operates pharmacies, distributes pharmaceutical products, and operates retail drugstores in several locations globally. Fairholme initiated a position in the company in Q4 2021 with 21,000 shares, which later bumped to 74,000 in Q3 2022. The fund has maintained this position since then – it did not report any activity in the past three quarters. Interestingly, the Walgreens Boots Alliance Inc (NASDAQ:WBA) share price has maintained a general downtrend in this period.

In the first quarter of 2023, 39 hedge funds had stakes worth $678.5 million in Walgreens Boots Alliance Inc (NASDAQ:WBA). In addition, Candlestick Capital Management held 1.85 million shares of Walgreens Boots Alliance Inc (NASDAQ:WBA) shares making it the company’s most significant stakeholder.

7. Intel Corporation (NASDAQ:INTC)

Number of shares as of March 31, 2023: 94,500

Share of Fairholme portfolio as of March 31, 2023: 0.25%

Number of Hedge Fund Holders: 68

Most investing gurus have their eyes trained on the semiconductor industry because of the market’s immense growth potential. Berkowitz spotted the opportunity earlier – he initiated a position in Q2 2021 by purchasing 157,500 shares of Intel Corporation (NASDAQ:INTC). His fund grew the holding to 588,400 shares three quarters later but trimmed to 277,300 in Q4 2022. In the most recent 13F filing, Fairholme holds 94,500 Intel Corporation (NASDAQ:INTC) shares, implying that the fund trimmed about 66% of the holding. Although Intel Corporation (NASDAQ:INTC) dominates the server and PC markets, Berkowitz may have concluded that Nvidia and AMD are encroaching on the company’s moat, necessitating an evaluation of the investment.

Insider Monkey’s Q1 2023 database shows that 68 hedge funds owned stakes in Intel Corporation (NASDAQ:INTC), compared with 62 in the previous quarter. With over 1.5 million shares, Ken Griffin’s Citadel Investment Group was the company’s leading stakeholder in Q1.

ClearBridge Investments made the following comment about Intel Corporation (NASDAQ:INTC) in its Q4 2022 investor letter:

“A third approach to return generation is purchasing idiosyncratic businesses that largely control their own destiny. Intel Corporation (NASDAQ:INTC), which we purchased in the first quarter on the premise that it would develop a leading domestic foundry business, has struggled with execution missteps and product delays. We are maintaining the position to provide ongoing exposure to semiconductors.”

6. Energy Transfer LP (NYSE:ET)

Number of shares as of March 31, 2023: 268,700

Share of Fairholme portfolio as of March 31, 2023: 0.27%

Number of Hedge Fund Holders: 35

Energy Transfer LP (NYSE:ET) owns and operates oil and gas infrastructure across the United States. The company has been in Fairholme’s portfolio since Q3 2020, with the holding peaking at 1.51 million shares in Q4 2021. Fairholme trimmed the shares to 844,200 in Q1 2022, then to 268,700 in Q2 2022, after which it avoided tinkering. This is to say that Fairholme did not register any activity on the ET counter in the past four quarters, including Q1 2023.

According to Insider Monkey’s first quarter database, 35 hedge funds were bullish on Energy Transfer LP (NYSE:ET), with collective stakes worth just over $591.3 million, compared to 38 funds in the prior quarter worth $613.4 million. David Abrams’ Abrams Capital Management with 17.83 million shares, is the biggest stakeholder in the company.

Click to continue reading and see Top 5 Stocks in Bruce Berkowitz Portfolio.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on May 1, 2024 at by Inan Dogan, PhD

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Published on May 2, 2024 at by Insider Monkey Staff

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