market folly

Fairholme Capital's Bruce Berkowitz recently sat down with Bloomberg and talked about his concentrated approach and how a mutual fund might not be the ideal vehicle for his strategy.

He mentioned he would be closing his fund to new investors, saying:

"Less is more.  If more money came in (to Fairholme), I can't buy more AIG because we're so concentrated ... so I do not want a lot of cash coming in that would potentially dilute those positions for existing shareholders."

He's focused on having shareholders who are truly long-term investors.  After all, every fund manager desires 'permanent capital' or as close to it as they can get. 

On that front, Berkowitz was asked about the Fairholme Partnership perhaps transitioning to a vehicle that has a 5-year lockup where fickle investors can't pull capital on a whim.  So what's he have up his sleeve?  When pressed on the issue, Berkowitz said to "stay tuned."

Mutual fund rules have essentially prevented Berkowitz from buying more Bank of America (BAC).  When asked if he'd like to buy more, he had only one word: "yes."

Embedded below is Bruce Berkowitz's interview with Bloomberg:



For more on this investor, definitely be sure to check out notes from Bruce Berkowitz's CSIMA presentation.