July 28th Episode:

Discover the future of AI investments with Michael Lippert, Head of Technology Research at Baron Capital. He believes AI is now at its transformative inflection point.
Join us for an insightful discussion on his recently published report, ‘Investing in AI: Opportunities and Risks,’ where we explore the potential of AI as a game-changing technology.
As the Portfolio Manager of Baron Capital’s high-growth stock-oriented Baron Opportunity Fund, he shares his strategies for identifying companies with durable competitive advantages and cash-generative business models, fostering double-digit multi-year projected annual returns.
Gain valuable insights into the growth potential of AI investments from a seasoned expert’s investment perspective.

Just a quick ”sobriety check” …
Some YTD numbers for the first 7 months of 2023 along with the annualized rate of increase …
NASDAQ +36.79% YTD (Annualized= +63%)
S&P 500 +19.34% YTD (Annualized = +33.15%)
DOW +6.98% YTD (Annualized = +12%)
STOXX (Europe) +17.74% (Annualized = +30.4%)
Nikkei 225 (Japan) +25.54% YTD (Annualized = +43.80%)
Most EM markets have done well. Argentina sports a +126% YTD increase, which corresponds to an annualized rate of +216%
(Data from Bloomberg)
Than there’s this from January 2 : ”2023 to be a tough year: IMF”
https://www.mutualfundobserver.com/discuss/discussion/comment/158208/#Comment_158208

See current Barron's for a feature on pharma (just 1 segment of healthcare), LINK1 LINK2
The PHARMA industry (MRK, JNJ, BMY, ALPMY, etc) is launching legal wars against Medicare/CMS on its new DRUG PRICING negotiation authority. The pharma industry is hoping to delay, slow or reverse the implementation by winning a national injunction in SOME court and then eventually fighting it before the SUPREMES. The US Chamber of Commerce has also asked a federal court for injunction against Medicare/CMS. CONGRESS passed the related law as part of the Inflation Reduction Act, and since then, the pharma index has lagged. (The current system is that private PBMs and healthcare systems negotiate drug prices, and then the Medicare/CMS just goes along. This system was seriously broken by Biogen’s/BIIB greedy pricing of its 1st Alzheimer drug that was approved by the FDA. Eventually, that drug failed in the marketplace due to resistance from Medicare/CMS. Biogen’s 2nd Alzheimer drug has done better.)

Morningstar has never reconciled its Manager of the Decade award for Bruce with Fairholme's stewardship.
Here's its Fairholme Parent Rating "Q" assessment:
"Fairholme has a ways to go to become an industry-standard steward, resulting in a Below Average Parent Pillar rating."
The firm has "just" $1.44B in AUM, well below its high of $20B+.

https://www.sec.gov/Archives/edgar/data/1096344/000119312523197702/d486209d497.htm
FAIRHOLME FUNDS, INC.
The Fairholme Allocation Fund
(the “Fund”)
Supplement to Prospectus and Summary Prospectus
Dated March 30, 2023
Supplement dated July 28, 2023 to the Prospectus and Summary Prospectus of the Fund dated March 30, 2023.
On July 27, 2023, the Board of Directors (the “Board”) of Fairholme Funds, Inc., at the recommendation of Fairholme Capital Management, L.L.C., the investment adviser to the Fund, approved the liquidation and termination of the Fund. Effective at market close on July 28, 2023, the Fund will suspend the offering and sale of its shares. The Fund expects to make the final liquidating distribution on or about August 31, 2023 (the “Liquidation Date”).
At any time prior to the Liquidation Date, shareholders may redeem shares of the Fund, or exchange shares of the Fund for shares of the Fairholme Fund or the Fairholme Focused Income Fund, both of which will remain open to investors, in the manner described in the Fund’s Prospectus. In connection with the liquidation, the Board has approved the waiver of the redemption fee of 2.00% imposed on Fund shares redeemed or exchanged within 60 calendar days of their purchase.
Shareholders should be aware that the Fund may convert assets to cash and/or cash equivalents before the liquidating distribution is made to shareholders. Accordingly, the Fund will no longer pursue its stated investment objective or engage in any business activities except for the purposes of winding up its business and affairs, paying its liabilities and distributing its remaining assets to shareholders. If a shareholder has not redeemed his or her Fund shares prior to the Liquidation Date, the shareholder’s account will be automatically redeemed and an amount equal to the shareholder’s proportionate interest in the Fund’s assets will be distributed to the shareholder on the Liquidation Date.
The redemption, sale, exchange or liquidation of Fund shares may be a taxable event to the extent a shareholder’s tax basis in the shares is lower than the liquidation proceeds per share that the shareholder receives. Shareholders should consult with their personal tax advisers concerning their particular tax situation.
If you hold Fund shares in a tax-deferred retirement account, you should consult with your personal tax adviser or account custodian to determine how to reinvest your liquidation proceeds on a tax-deferred basis.
* * * * * *
YOU SHOULD RETAIN THIS SUPPLEMENT WITH YOUR PROSPECTUS AND SUMMARY PROSPECTUS FOR FUTURE REFERENCE.

Has VUSXX been less state tax exempt than VMFXX in recent memory?
I posted in a hurry and should have qualified that VUSXX was 100% state tax exempt in 2022.. At the current 7 day yield why would not I park my money in VUSXX over VMFXX, which was my point. I will be surprised Yogi to whom the post was addressed to alert him as he was planning to park money in VMFXX did not understand the info & context.

When it came to fame, the 1st decade of century, FAIRX was a much more docile fund ... relatively low vol. That changed in 2nd decade. Good to see the fund and its long-time believers rewarded.

Notable, sure ---- but how long did he have to hold the position to see that gain? IIRC that's been a dog stock for well over a decade and I suspect he's been underwater for most of it as their largest shareholder.

As a result of these promising developments [in 2021], Berkowitz commented that Charlie Munger (Trades, Portfolio) was correct when he said, “The big money is not in the buying or the selling, but in the waiting.”

https://www.forbes.com/sites/gurufocus/2021/08/02/berkowitzs-fairholme-fund-takes-a-spade-to-largest-holding-st-joe/
The fund has landed in the top 5% or the bottom 5% every year in the past nine. It seems not so much a matter of having to wait a decade for a big pop as it is a matter of having more losing years than winning ones.

VUSXX is yielding higher than VMFXX and is 100% state tax exempt.
One third of its portfolio is currently (June 30th) in repurchase agreements. Those are not state tax exempt. The fund has owned even more than a third at times this year. 2023 seems to be the first year (at least in the past several) in which substantial VUSXX assets are invested in repurchase agreements.
See, e.g. Vanguard's 2019 tax info, showing that 2.21% of VUSXX income was state-taxable.

But not the whole truth. The first quote continues: "This can be seen in its five-year alpha calculated relative to the category." The second quote continues: "lagging both the category benchmark and average peer over the past 10-year period."
Over the past YTD, 1,3, and 5 years, M* reports that FAIRX finished in the top 4% or better. Over the past 10 years, FAIRX finished in the bottom 5%.
This shows that time frames matter. That, and the fact that recent performance can skew figures for several years. FAIRX returned over 34% YTD vs. about 7% for the category. That supercharged performance is enough to make all the trailing results through five years look great, but not enough to make the 10 year performance look good.

Hi @Yogibearbull,
Also, can I cancel the auction order after I enter it and how late?
In the auction results, why is Investment Rate always higher than the High Rate? I thought it would be the other way around.
https://www.treasurydirect.gov/auctions/announcements-data-results/
P.S.: VUSXX is yielding higher than VMFXX and is 100% state tax exempt.

It has been mentioned by others. BUT I have verified it in my Fido a/c.
I have a margin a/c at Fido. But Fido is very aggressive in sending margin notices even when those aren't really required. For example, if I sell $x in mutual fund/OEF (T+1) and right away buy about $x in ETF (T+2), OR if I put in a T-Bill auction order for Monday that will settle on Thursday with a maturing T-Bill, Fido will send margin alerts anyway. But everything will even out on the settle date. So, I just ignore Fido margin alerts in such cases - NOT a good idea generally.

Hi Yogi,
I am thinking of the up coming 52 wk auction. At Fidelity and Vanguard, do you by any chance know if I can enter my order for a Treasury Bill auction on the date of the auction, say before 10AM EST, or do I have to enter the order the prior day?

Well, that's one of those "Yeah buts" I was talking about :)
Annualized return for St. Joe over the past decade is 11.53%

I'll just plead ignorance - I really haven't thought of that stock since the mid-00s!

Well, that's one of those "Yeah buts" I was talking about :)
Annualized return for St. Joe over the past decade is 11.53%

Steller earnings at St. Joe yesterday propelled the Fairholme Fund to a gain of 15.01%. That may be the largest single day advance for a mutual fund I have ever seen. This on top of a YTD gain of either 33.3% (Morningstar) OR 34.34% (Yahoo).
There are always a lot of "Yeah, but"s when talking about Fairholme's performance, but from inception it has done just fine, especially after this year, and especially after yesterday. One has to go cherry picking to choose time periods which cast it in a bad light.
"Sure it's done great this year, for the past year, for the past 3 years, the past 5 years and the past 20 years, and it's done okay for the past 15 years --- but what about that 10 year number???"
I think what Bruce Berkowitz has always talked about delivering was good but quite lumpy returns. Is that what we're now seeing?
And by the way, what about this discrepancy between Morningstar and Yahoo? Does this happen often? Which is correct?

There's a limit to what the guys are allowed to talk about just now. I did ask about two things that I thought were permissible. First was why they delayed in 2017 and the second was why the fund is flagged as closed to new investors.

A1: The postponement of the launch of Capital Appreciation and Income Fund launch in 2017 was due to an internal job transition involving the fund’s then co-portfolio manager. We wanted to be sure that all necessary support resources for the fund, including investment personnel, were firmly in place, so a decision was made to delay.
The answer on the closure was, as I suspected, a typo. I think they were copying and pasting from the PRWCX perspectus.

”We are spending time here to learn from one another … “
+1 @Mark
But if you already know everything there is to be known …. :)

If what makes you comfortable is the only (or main) criterion why are we spending so much time here?
Investing is all about performance...or...other investors are looking for better risk-adjusted performance.
I have a neighbor who is a multi-millionaire since the early 90s. He invested over 90% in Munies and the rest in stocks. So, he is very comfortable. Was that a great choice?
Actually, he could be all in MM and still would do great.
BTW, I have been discussing high-income investing since 2010. They look good for a while and then they don't.
First, it was VZ,ATT,IBM against SPY,QQQ or MSFT, AAPL
Second came MLP which got crushed.
Third came CEFs and they made so much less than SPY,QQQ in the last 5 years.
If you can prove that very high-income investing has better performance or even better risk-adjusted performance, I'm listening.

Fund Allocations (Cumulative), 6/30/23
There were noticeable shifts into stocks. The changes for OEFs + ETFs were based on a total AUM of about $30.45 trillion in the previous month, so +/- 1% change was about +/- $304.5 billion. Also note that these changes were from both fund inflows/outflows & price changes. #Funds #OEFs #ETFs #ICI
OEFs & ETFs: Stocks 58.78%, Hybrids 4.94%, Bonds 19.03%, M-Mkt 17.25%
LINK

Using Backtest, if one started with $1m in 2000 using 50/50 SPY/VBMFX (BND was not in existence) and took all income, rebalanced yearly, one ended up with slightly over $1m in 2010 and a decent income stream (positive TR). It's all we have to foretell the future. A couple of mistakes trading in 10 years to make a good TR could have been serious.

I had an edit; The decade was 2000 to the end of 2009, not end of 2010. The results were a little different. The average income was the same but the $1m was short $37k. Still not disastrous.