Fairholme Capital, led by Bruce Berkowitz, runs a pretty focused portfolio and I found their most recent filing very interesting:
Berkowitz’s two largest new positions were big stakes in Boeing (BA) and Northrop Grumman (NOC), the win-win US tanker contract trade, if you will. I have both on my watchlist and keep in mind that Berkowitz bought in around $60 on the two stocks; both are trading around $40 now and near 4% yield. I feel like I need to do more research to get the defense industry into my circle of competence but if I thought there was value in those two stocks before, Berkowitz’s bet piques my interest even more.
Berkowitz can’t be accused of lacking conviction. He added heavily to his healthcare positions, increasing his Pfizer (PFE) and UnitedHealth Group (UNH) by over 20% and Forest Labs (FRX) by nearly 50%. It looks like he’s reversed his selling on Canadian Natural Resources (CNQ), adding back 46% of his position as the stock has dropped. Berkowitz still believed in Eddie Lampert at Sears (SHLD), at least as of Q3 (remember that SHLD has fallen from $90 to under $40 now). And perhaps most interestingly, he continued the accumulation of Leucadia National (LUK), adding 36% more shares after adding over 10% last quarter. At the time, LUK was trading in the mid $40 range but now trades under $18. Might be time to dig into LUK, which is sometimes lumped in with Brookfield Asset Management (BAM) since both have reputations as “mini-Berkshires.”
