Bruce Berkowitz, founder of The Fairholme Fund, recently appeared on Consuelo Mack WealthTrack. One of Mr. Berkowitz’s principles involves an exercise that he refers to as “trying to kill the business”. Essentially, this means that investors should consider fatal risks to a business. By focusing on companies with strong balance sheets and ample cash flow, investors should be able to reduce the risk of an external shock to the industry or economy destroying the business. Read this article for more information and to view the video.
We are always interested in listening to the views of Bruce Berkowitz of The Fairholme Fund. In this interview recorded this evening for the PBS Nightly Business Report, Mr. Berkowitz comments on a number of his holdings, including Berkshire Hathaway. He appears to be very positive on Berkshire’s acquisition of Burlington Northern Santa Fe. Read this post to access the video of Mr. Berkowitz.
In a conference call this afternoon, Bruce Berkowitz answered a number of shareholder questions regarding The Fairholme Fund, the state of the overall stock market, and prospects for health care reform. Mr. Berkowitz’s record at The Fairholme Fund since its inception on December 29, 1999 has been nothing short of extraordinary. Based on the fund’s semi-annual report dated June 30, 2009, annualized performance since inception has been a gain of over 12% annualized compared to a loss of over 3% annualized for the S&P 500. Read this post for a summary of the conference call.
I have always believed that investors with an overly optimistic view of the world have an inherent disadvantage and can be predisposed to overpay for securities. While I do not advocate being a pessimist in general, there are advantages that clearly exist for investors who attempt to think of all the possible factors that could go wrong when evaluating an investment. The need for a healthy dose of “pessimism” is nowhere more urgent than when an investor is evaluating bargain basement stocks selling for under net current asset value.