ET - Tracking Bruce Berkowitz's Fairholme Portfolio - Q2 2023 Update

2023-09-06 02:52:56 ET

Summary

• Fairholme's 13F stock portfolio value increased from $1.21B to $1.32B this quarter, with most assets invested in St. Joe Company.
• New stakes were established in W. R. Berkley, Comerica, U.S. Bancorp, and KeyCorp, each representing less than 0.60% of the portfolio.
• Stake disposals included Magellan Midstream, Citigroup, Intel, and Walgreens Boots Alliance, each representing less than 0.5% of the portfolio.

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 8/14/2023. 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 Q1 2023.

Berkowitz's 13F stock portfolio value increased from $1.21B to $1.32B this quarter. The 13F portfolio currently has most of the assets invested in St. Joe Company.

Berkowitz's flagship Fairholme Fund ( FAIRX ) has generated significant alpha since its December 1999 inception: the fund returned at an annualized rate of 9.58% compared to 6.85% 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). The stake in Fannie/Freddie pfds was reduced by ~40% during H1 2023.

New Stakes:

W. R. Berkley (WRB), Comerica (CMA), U.S. Bancorp (USB), and KeyCorp (KEY): These are very small (less than ~0.60% of the portfolio each) stakes established this quarter.

Stake Disposals:

Magellan Midstream (MMP): MMP was a very small 0.13% of the portfolio stake established last quarter at prices between ~$50 and ~$50. It was disposed this quarter at prices between ~$54 and ~$63. The stock currently trades at $66.54.

Citigroup (C ), Intel (INTC), and Walgreens Boots Alliance (WBA): These very small (less than ~0.5% of the portfolio each) stakes were dropped this 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 $26.72. There were minor increases in the last four quarters.

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 by 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 next quarter at prices between ~$264 and ~$319. The stock currently trades at ~$361 and the stake is now at 1.71% of the portfolio. There was a ~4% trimming last quarter while this quarter saw a ~10% increase.

Stake Decreases:

St. Joe Company (JOE): ~87% 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 ~$58. There was marginal trimming in the last six quarters. They control ~36% of the business.

Commercial Metals (CMC): The 0.52% 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 $56.30. There was a ~43% selling last quarter at prices between ~$43 and ~$57. That was followed by a ~90% reduction this quarter at prices between ~$43 and ~$54.

Kept Steady:

Apple Inc. ( AAPL ) and Energy Transfer LP (ET),: These very small (less than ~0.3% of the portfolio each) positions were kept steady this quarter.

The spreadsheet below highlights changes to Fairholme's 13F stock holdings in Q2 2023:

For further details see: