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Home > Financial Services > Mutual Funds > Fairholme
Fairholme
The Fairholme Fund opened with 100,000 dollars in 1999 and has grown by "trying to buy dollar bills for 50 cents, the initial minimum is 2,500 dollars.
Fairholme Funds seeks long-term capital appreciation. The fund normally invests at least 75 percent of assets in U.S. equity securities. It may invest up to 25 percent of its total assets in foreign securities that are traded on a U.S. exchange, either directly or in the form of American Depository Receipts (ADRs). The fund may invest a significant percentage of assets in cash and cash reserves under adverse market conditions. It may invest cash and cash reserves in U.S. government debt instruments, other unaffiliated mutual funds and repurchase agreements.
Fairholme's biggest holding is shares of Berkshire Hathaway Inc., 38 percent-owned by Buffett. The mutual fund's second-largest investment is Leucadia National Corp., whose founders own about 24 percent of the company. Pitkowsky and Trauner, along with Fairholme Capital Management LLC President Bruce R. Berkowitz, have a combined 5 million dollar in the fund.
The Fund has also built sizeable investments in energy developers Canadian Natural and Penn West. Both companies have successfully navigated booms and busts resulting in large owned resources and retained earnings. Absent extreme price declines for oil and gas, they will continue to gush with cash in a world where energy demand seems to be clearly outstripping supply. Berkshire Hathaway remains the Fund’s largest equity investment. While the company has had an outstanding multi-decade record, its stock market value has not kept pace in recent years with their estimate of business value. The Fund has made a number of new investments that have the potential to become meaningful.
The 1.4 billion dollar Fairholme Fund rose at an annual rate of 15.2 percent during the past five years, outpacing 90 percent of competing funds and the 0.4 percent advance of the Standard & Poor's 500-stock index. The top-performing fund of the past five years that has a similar strategy of investing in companies whose stock prices are low relative to earnings growth is the 345 million dollars Delafield Fund, data compiled by Bloomberg show. The Fairholme Fund owns shares of 15 to 25 companies. Cash and Treasury bills make up almost 30 percent of its assets.
The Fairholme Fund’s mission is to have more knowledge and use knowledge better than any investment firm in the world, to use and share knowledge to help its clients achieve investment success and peace of mind, to place their clients’ interests first and foremost.
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