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 2/14/2022. 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 Q3 2021.
Berkowitz's 13F stock portfolio value increased ~23% from $1.24B to $1.53B this quarter. The 13F portfolio currently has most of the assets invested in St. Joe Company.
Berkowitz's flagship Fairholme Fund (MUTF:FAIRX) has generated significant alpha since its December 1999 inception: the fund returned at an annualized rate of 10.20% compared to 7.36% for S&P 500 index through 2021. FAIRX has however underperformed over the most recent 10-year period. Of the ~$1.5B AUM, Cash and Equivalents are at ~13%, St. Joe stock at ~77%, Fannie/Freddie pfds at ~2.7%, Enterprise Products Partners at 2.3%, Commercial Metals at 2.3%, and Imperial Metals at ~1.5%. The other funds under Fairholme umbrella are Fairholme Focused Income Fund (MUTF:FOCIX) and Fairholme Allocation Fund (FAAFX). Equity holdings that are not in the 13F report include Fannie Mae (OTCQB:FNMA) pfds, Freddie Mac (OTCQB:FMCC) pfds, and Imperial Metals (OTCPK:IPMLF).
New Stakes:
Lyondellbasell Industries (LYB), Dow Inc. (DOW), Walgreens Boots Alliance (WBA), and Citigroup (NYSE:C): These are minutely small (less than ~0.25% of the portfolio each) new positions established this quarter.
Stake Disposals:
Nutrien Ltd. (NTR): NTR was a very small 0.10% of the portfolio position established last quarter but disposed this quarter.
Stake Increases:
Commercial Metals (CMC), Enterprise Products Partners (EPD), and Intel Corp. (INTC): These three positions were increased substantially over the last two quarters. The 4.20% of the portfolio stake in CMC was built over the last three quarters at prices between ~$28 and ~$36 and the stock currently trades at ~$41. EPD is a ~3% of the portfolio position primarily built over the last two quarters at prices between ~$20.75 and ~$24.70. The stock is now at $24.12. The 1.78% INTC stake was purchased over the last three quarters at prices between ~$48 and ~$68. The stock currently trades below that range at $46.63.
Kinder Morgan (KMI) and Energy Transfer LP (ET): These small (less than ~1.10% of the portfolio each) stakes were established in Q3 2020. The 1.26% KMI position saw a ~220% stake increase in Q4 2020 at prices between ~$11.50 and ~$15 and it currently trades above that range at $17.25. Last two quarters also saw a ~57% stake increase at prices between ~$15.25 and ~$18.70. ET is a 0.81% of the portfolio position purchased at prices between ~$5 and ~$8.60 and it is now at $9.84. There was a ~45% stake increase last quarter at prices between ~$8.75 and ~$10.70. This quarter saw a marginal increase.
Old Republic International (ORI): The very small 0.60% stake in ORI was increased by ~60% this quarter at prices between ~$23 and ~$26. The stock currently trades at $25.94.
Stake Decreases:
St. Joe Company (JOE): ~85% 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. 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 $53.16. There was marginal trimming this quarter. They control ~43% of the business.
Note: Fairholme's 2021 annual report had the following on St. Joe: Although profits have grown, the share price is still not reflecting long-run growth potential.
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 with a ~15% reduction next quarter at prices between ~$227 and ~$265. The stock currently trades at ~$336 and the stake is now very small at ~1% of the portfolio. There was marginal trimming this quarter.
Alibaba Group Holding (BABA), Enbridge Inc. (ENB), Williams Companies (WMB), and Western Midstream Partners (WES): These very small (less than 0.75% of the portfolio each) positions were reduced during the quarter.
Kept Steady:
Apple Inc. (AAPL): The minutely small 0.16% of the portfolio stake in AAPL was kept steady this quarter.
The spreadsheet below highlights changes to Fairholme's 13F stock holdings in Q4 2021:
John Vincent
Focused on analyzing 13F reports & building tools to help DIY investors generate absolute returnsthrough exploiting inefficiency, volatility, and momentum.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of AAPL, FMCC, FNMA, INTC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
I am long Fannie/Freddie pfds.
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