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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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FAIRX

Would anyone here initiate a position in FAIRX today? If yes, why? If not today, when? If not ever, why? I'm just curious.

Comments

  • Hi Clem,

    Interesting question, but perhaps not for the reasons you might imagine.

    In short, yes...I would initiate a position in FAIRX. However, you need to know that this is one of my largest holdings so I am a bit biased.

    Due to the concentration, to have a position in FAIRX you simply need to answer 2 questions:

    -Do you like AIG and BAC? I do..and these are about 60% of the portfolio.

    -Do you trust Bruce Berkowitz to make calls even though he may be early? I do.
  • I owned FAIRX but had to liquidate around the time of the downturn. I needed the money to pay for medical reasons (nothing bad). I was planning on holding it even though everyone was bailing. I've often thought about investing in it again, but didn't have the 10K to get back in. I do now. I now have GOODX which I'm very happy with. I was always impressed by Keith & Larry's commentary and felt perfectly comfortable jumping on board as soon as I could.

    Please keep contributing to this discussion people:)

    Clem
  • edited November 2013
    Yes. I side with PRESSmUP here. I'm also heavy FAAFX.

    I will never forget BB's early call on BAC.

    And talk about a PM with skin in the game.

    Here's link to an earlier discussion on the board:

    Bruce Berkowitz Rolling Dice On Bailout Babies--- Again !

    A little way down, note some analysis I did entitled: "What a difference a decade makes."

    Hope this helps.

    Charles
  • Thanks Charles. What do you think about getting in now? I know the mkt. is high, but I can't time the mkt. I'm basically a buy and hold dollar cost avg. investor. I can handle volitility. I don't know if AIG and other financials are a good investment. That's why I invest in go anywhere value MF's with great managers. I want them to make those calls. Other funds I own are OAKBX, OAKWX, GOODX, FPACX, MACSX, MAPIX.

    Clem
  • edited November 2013
    Reply to @clemg64: I like go anywhere funds too. Since you are a long-term investor, as David would say, it does not matter when you jump in.

    Hmm, if it were my portfolio given the choices above plus FAIRX?

    Probably something like:

    FPACX 40%
    FAIRX 30%
    MACSX 20%
    OAKWX 10%

    But I trust you know by now that I can barely spell financial advisor...er, adviser.

    =)
  • Thanks C,

    and not to worry...I'm not going to win any spelling bee's myself.

    Clem
  • For a comment worth even less than 2 cents:
    Having ridden FAIRX & FAAFX down and finally up and having an AIP for FPACX, I have to believe that the CAPE or PE10 numbers mean something at the current market values, which (to me) is that one should select managers with good records and big cash holdings or invest as an act of faith with one's chosen star(s) - which statistics show is not better than index investing for the truly long run.
    As I have learned, patience before investing is as important as patience after investing, since I have real difficulty selling a fund or stock.
    Were I you (which you should be grateful I am not), I'd invest 30% of my intended amount and wait. If it goes up, you have something; if not, you can put in some more later. Obviously, I expect the market to regress closer to its mean in time. It's difficult to sit on cash, so buy RSIVX or a similar fund of your choice.
  • Berkowitz is quite willing to hold cash or conservative assets when he thinks the market is overvalued. FAIRX & FAAFX together are about a sixth of my total portfolio. Obviously he can be early, and no one is perfect, but I'm willing to believe that he's better not only at stock picking but also at asset allocation than I am. So yes, I would invest in FAIRX now, though as with any equity-heavy fund, don't put anything in the fund that you might need in the next 3 to 5 years.
  • I would invest in Berkowitz today. Not all at once as someone else said, but he is a manager I want for the long run. I own FAAFX and prefer that over FAIRX (which I don't own) mostly because it has a much lower asset base. I see it as having greater flexibility to be more multi-cap. FAIRX on the other hand is kind of restricted to large-caps.
  • thanks all for the comments. It's 10K to get back in. That isn't a large amount of my total retirement, but its almost 17% of my supplimental Roth accounts. It's something I'll have to think about. I wish I could have stayed with it before, but I had to liquidate for personal reasons.
    Clem
  • So is he gambling at his point or is he a clever genius that knows exactly what he's doing and has the guts to do what others won't?
  • Reply to @clemg64:

    Fairholme proposes $52B recap for GSEs: WSJ
    Fairholme Capital Management offers to spearhead a move by a consortium of investors aimed at "purchasing, recapitalizing, and operating the mortgage-guarantee businesses" of Fannie Mae (FNMA) and Freddie Mac (FMCC) as state-regulated bond insurers, WSJ says.The offer was reportedly outlined by Bruce Berkowitz in a letter sent Wednesday evening to federal regulators.Earlier: Hedge funds pitch takeover of Frannie
  • Reply to @clemg64: >> So is he gambling at his point or is he a clever genius that knows exactly what he's doing and has the guts to do what others won't?

    If you set up such a false choice there can be no thoughtful answer. Of course he is gambling, like any investor. And of course he does not know exactly what he's doing, like any investor. Can you pose your concern more sensibly, apart from asking if the future can be told? (Answer to that is known.) What is the question? Is it, What do we imagine his confidence level is?
  • I thought I read an article a few years back in which BB said he wanted to create something like BerkshireHathaway with enough funds to buy control of companies. That was partly why FAAFX required the $25K buy-in, so that the money might be "sticky", whereupon the value dropped significantly, testing the adhesive quality of his investors.
    He is having big ideas, and he probably could pull off the coup, if allowed.
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