Followup on "finding a good investment manager"

After a while of looking, reading, etc I recalled Bruce Berkowitz from Fairholme Fund (FAIRX). I think that Bruce is a bright guy, with the right way of thinking about risk, with the investing approach I like and a person who likes what he is doing. I have read quite a bit of what he said, and while I do not agree with everything, I agree with most of what he is saying.

He very substantially outperformed S&P 500 over the last 10 years, which is something that I do not consider to be a purely random phenomenon. He also outperformed my own returns. He likes to concentrate his holdings a lot more than a typical mutual fund, which is a correct approach to decision making. This way, first, decisions matter, and second, he can act on his best 15 ideas instead of best

100 ideas.

I will read some more, but I think that I will move some IRA assets to his fund.

i
Reply to
Igor Chudov
Loading thread data ...

[...]

Morningstar gives it 5 stars (their top rating) and it's a analysts pick. The summary from their analyst research:

"We have full confidence in this fund. It will hit potholes but strong stock-picking gives it an edge that will accrue over time: It has returned an average of 9.1% annually since inception, while its typical peer has lost 4.7% per year in that stretch."

The only downside I see is that, at 1.01%, the expenses are a bit higher than I would like, but that is not a deal breaker to me. It is pretty tax efficient, you may want to consider using taxable funds instead of IRA.

-- Doug

Reply to
Douglas Johnson

Doug, I agree with you to some extent. I think that FAIRX is a good candidate for IRAs and an even better one for taxable money.

I spent quite a bit of time reading various interviews by Bruce, such as the 36 pages one given to Oustanding Investor Digest, and am now very convinced that I should move quite a bit of different sorts of accounts to that fund to manage.

My current problem is that many things that I own in my taxable accounts, are very cheap relative to their value range, so I am very reluctant to sell them, even to give the proceeds to such an outstanding guy as Bruce, to manage.

Nevertheless, I will open a taxable account at Fairholme, as well, and will start moving money there.

At 6 billions in assets, it will not take that many successful years for him to become too big, but by that time I can find some other use of money.

i
Reply to
Igor Chudov

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.