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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

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WealthTrack: Interview with Bruce Berkowitz (FAIRX)


  • He certainly is NOT backing down from BofA or AIG. I cannot quite figure out whether it is GENIUS or HUBRIS???

    He certainly makes a decent argument for buying stocks when they are on sale. But the real question might be "Is there ever a price low enough to buy junk"???

    He is so confident of his judgment that he is now virtually 100% invested in stocks, even though his past philosophy was to always have a backup cash reserve.

    It sounds like his biggest fear is NOT about his current holdings, but rather if even more shareholders lose faith in him and desert him-- then he has no cash to pay them and will be forced to sell out his positions before they have reached their potential.

    I believe this might be the very reason why he is preaching his ideas so much, so that his disciples won't run for the doors.
  • edited September 2011
    He may eventually be proven right, especially if Too Big To Fail continues, which is essentially what he's betting on. However, a number of his past actions would indicate hubris probably plays a very significant part.
  • edited September 2011
    It was just revealed that Fairholme now has made a move with 10% of the fund allocated to Greek stocks.

    Just kidding.

    Anyone interested in any speculative Greek plays that could tank further or maybe triple your investment....sorry I mean to say it could triple your gamble? How about EXM or NNA? Extremely cheap P/B ratios.

  • Reply to @Greg: Bruce also lost a lot of his cash reserves when people left the fund. Not sure where I saw that figure, but the number of folks cashing out of FAIRX was pretty remarkable. As I've noted here before, I think Bruce brought some of this on himself, since he continued to let hot money pour into the fund as his renown spread.
  • Perhaps there are some undervalued Greek companies due to this mess, but their sovereign bonds are not appealing. Whether you'll get your money back depends on essentially the generosity of their EU colleagues and not the strength of Greece. The government is insolvent, the question is how badly do the other Euro countries want to save their own banks from being taken down with them. I'd rather not leave my money to the whim of the politicians with competing interests.

    If I wanted to play the Euro bailout, I'd consider Italian bonds. It's more of a liquidity issue and not a solvency question. Plus they are Too Big To Fail, so I think there is less risk and stronger fundamentals backing their bonds.

    Or forget Europe and go buy Hong Kong dollar call options like Bill Ackman. Is this trade even available to retail investors? I don't even know where to look for currency options.
  • edited September 2011
    The issue with Greek "value" stocks is that what happens to the economy? You're talking about a (insolvent, I agree with mns) country undergoing a massive change and what it looks like on the other side of that, in terms of currency, austerity, etc remains to be seen. Given the level of change and the level of turmoil that could revolve around that, I would be very careful about trying to invest in terms of price level. Additionally, aside from the National Bank of Greece, I don't even know what other companies are out there.

    The weirdest, most tiny alternative play on Greece that I can think of would be Dolphin Capital Investments (DOLHF.PK), which is a high-end (they've partnered with Waldorf Astoria and other such brands) property fund with a lot of property in Greece (as well as other locations, but there's a number of Greek properties.) It has been decimated, but their holdings are really quite beautiful and if there is at least some certainty as to how the Greek situation ends, maybe this would find a bottom. Beyond that, if this company had the cash, they could possibly pick up land on the cheap. I haven't done any research as to their position on that, but this would be a 48 cent a share alternative play on Greece. I don't own it because I can't seem to purchase it and definitely do your own research, but I think this is an interesting alternative play on Greece. This isn't a Greek stock, but it has quite a bit of exposure to Greece and the area.

    You can see their Greek properties below.

    If you believe fair value/book value, Dolphin is trading at a nearly 80% discount to the NAV reported on 3/31 and has been trading around that discount for a couple of years.]2]0]FCGBR$$ALL

    As for the $HKD trade, brokerages with global accounts can hold $HKD. You can also use any number of forex services, although I find 4x trading insane. There's not enough caffeine in the day for that. I don't know about currency options/derivatives.
  • Reply to @mns: I might strongly caution against moves like this.
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