He speaks favorably about Bank of America (BAC) and points out, while banks will still be absorbing bad loans for a while, that loans by banks since late 2008 have generally been of high quality.
In the interview, he also speaks favorably about another one his larger financial holdings Goldman Sachs (GS).
He also mentioned that Sears (SHLD), a company heavily dependent on the housing sector, will end up being a good investment in the long run once housing has an upturn saying:
...Sears has become a real win-win, in that if Eddie Lampert does what most people expect he can do – improve the retailing of Sears – the stock will fly high and recognize that. If he can't, the stock price will continue to be volatile, very depressed at times, less depressed at other times, and eventually he'll have one share and we'll have one share, and there will only be two shares.
I like that last line. Bruce Berkowitz understands that buybacks benefit long-term shareholders significantly if consistently done when a stock sells at depressed levels* (i.e. well below intrinsic value) using free cash flow over time. The math is pretty simple yet buying back a cheap stock is too often underutilized as a means to add long-term shareholder value. Apparently, Berkowitz has confidence that Sears' Chairman Eddie Lampert will apply good judgment in this area.
Lampert has bought back ~ $ 5 billion of stock in the past 4 years lowering the share count from 156 million to roughly 109 million.
More than 80% of the Fairholme Fund is now exposed to financial stocks. As far as I know that is more than any other non-financial sector specific money manager.
During the crisis Fairholme wisely had no exposure to banks.
Adam
* Unfortunately, the evidence seems to show that companies have a tendency to buy high. As this previous post reveals, far too many buybacks actually occur when a company's stock is expensive.)
GuruFocus Interview
Fairholme's Berkowitz on B of A, Goldman Sachs, and Sears
![Fairholme's Berkowitz on B of A, Goldman Sachs, and Sears]()
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