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Morningstar's Evaluation of FAIRX is an embarrassment
Morningstar's analysis of the Fairholme Fund states that the fund has delivered "excellent long term risk-adjusted performance".
It also says that "risk-adjusted performance has been weak", and also says that as regards FAIRX specifically that Bruce Berkowitz has "delivered inferior performance".
How can they expect to be taken seriously? It's a waste of time reading this nonsense.
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.
It's interesting that this fund is becoming a topic again after so many years. It was on my list, and I noticed it moving well a couple weeks back; so I took a flyer on it. Needless to say, I've been happy with the results. Pure luck, but good timing. Did ANYONE else actually BUY any; other than me, that is?
I haven't bought any recently, but I might as well confess the truth: I have had it for a couple of decades. I'm pretty passive about selling, but I did let go of a piece on Friday.
Comments
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.
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+.