FMCKK - Tracking Bruce Berkowitz's Fairholme Portfolio - Q1 2023 Update

2023-06-05 23:26:12 ET

Summary

• Fairholme's 13F stock portfolio value increased marginally from $1.20B to $1.21B in Q1 2023, with most assets invested in St. Joe Company.
• New stake in Magellan Midstream established, while Alibaba Group Holdings and Old Republic International were disposed of during the quarter.
• Stake increases in Enterprise Products Partners and stake decreases in St. Joe Company, Commercial Metals, Berkshire Hathaway, Citigroup, and Intel Corp.

This article is part of a series that provides an ongoing analysis of the changes made to Fairholme’s 13F stock portfolio on a quarterly basis. It is based on Fairholme’s regulatory 13F Form filed on 5/15/2023. Please visit our Tracking Bruce Berkowitz's Fairholme Fund Holdings article for an idea on how his holdings have progressed over the years and our previous update for the fund’s moves during Q4 2022.

Berkowitz’s 13F stock portfolio value increased marginally from $1.20B to $1.21B this quarter. The 13F portfolio currently has most of the assets invested in St. Joe Companies.

Berkowitz’s flagship Fairholme Fund ( FAIRX ) has generated significant alpha since its December 1999 inception: the fund returned at an annualized rate of 8.89% compared to 6.28% for S&P 500 index through 2022. FAIRX has, however, underperformed over the most recent 10-year period. The other funds under Fairholme umbrella are Fairholme Focused Income Fund ( FOCIX ) and Fairholme Allocation Fund (FAAFX). Equity holdings that are not in the 13F report include Fannie Mae ( FNMA ) pfds, Freddie Mac ( FMCC ) pfds, and Imperial Metals (IPMLF).

New Stakes:

Magellan Midstream (MMP): MMP is a very small 0.13% of the portfolio stake established this quarter at prices between ~$50 and ~$50 and the stock currently trades well above that range at ~$62.

Stake Disposals:

Alibaba Group Holding ( BABA ) and Old Republic International (ORI): These two small (less than ~0.75% of the portfolio each) stakes were disposed during the quarter.

Stake Increases:

Enterprise Products Partners (EPD): EPD is a ~9% of the portfolio position primarily built over the four quarters through Q2 2022 at prices between ~$21 and ~$28. The stock is now at ~$26. There were minor increases in the last three quarters.

Stake Decreases:

St. Joe Company (JOE): ~83% of Fairholme’s 13F assets are in St. Joe stock. The bulk of the position was purchased in the 2008-2009 timeframe and there have only been minor adjustments since. The last three quarters of 2017 had seen a combined ~14% increase at prices between $16.35 and $19.55. Since then, the activity has been minor. The stock is now at ~$46. There was marginal trimming in the last five quarters. They control ~42% of the business.

Commercial Metals (CMC): The ~5% of the portfolio stake in CMC was built over the five quarters through Q2 2022 at prices between ~$29 and ~$44 and the stock currently trades at $44.67. There was a ~43% selling this quarter at prices between ~$43 and ~$57.

Berkshire Hathaway ( BRK.A ) (BRK.B): Q1 2019 saw a 5.6% of the portfolio stake purchased at prices between $188 and $209. The position was reduced by ~85% to a very small 0.84% portfolio stake next quarter at prices between $197 and $219. Q1 2020 saw a ~9% portfolio stake built at prices between ~$162 and ~$230. There was a one-third increase next quarter at prices between $170 and $202. Q4 2020 saw a ~80% selling at prices between ~$201 and ~$234. That was followed with a ~15% reduction next quarter at prices between ~$227 and ~$265. Q3 2022 saw the stake almost doubled at prices between ~$264 and ~$307. There was a roughly one-third reduction last quarter at prices between ~$264 and ~$319. The stock currently trades at ~$329 and the stake is now at 1.52% of the portfolio. There was a minor ~4% trimming this quarter.

Citigroup (C) , and Intel Corp (INTC): These very small (less than ~1% of the portfolio each) stakes were decreased this quarter.

Kept Steady:

Apple Inc. (AAPL), Energy Transfer LP (ET), and Walgreens Boots Alliance (WBA): These very small (less than ~1% of the portfolio each) positions were kept steady this quarter.

The spreadsheet below highlights changes to Fairholme’s 13F stock holdings in Q1 2023:

Source: John Vincent. Data constructed from Fairholme's 13F filings for Q4 2022 and Q1 2023.

For further details see: