"Tracking Bruce Berkowitz’s Fairholme Portfolio – Q2 2015 Update"
"Bruce Berkowitz’s US stock portfolio decreased this quarter from $5.34B to $4.92B.Fairholme's huge stake in American International Group was reduced again this quarter.The portfolio is still very concentrated with the largest three positions accounting for ~80% of the US long assets.This article is part of a series that provides an ongoing analysis of the changes made to Fairholme’s US stock portfolio on a quarterly basis. It is based on Fairholme’s (FAIRX) regulatory  filed on 08/14/2015. Please visit our  article for an idea on how his holdings have progressed over the years and our  highlighting the fund’s moves during Q1 2015.Berkowitz’s US stock portfolio decreased 7.93% from $5.34B to $4.92B this quarter - the decrease was due to a large stake reduction in American International Group and a ~35% drop in the share price of Sears. The portfolio continues to be very concentrated with most of it invested in just five businesses. The largest three positions are American International Group, Bank of America, and Sears Holdings and together they account for two-thirds of the US long portfolio - the percentage increases to 79.76% when including the associated warrants.New stakes:National Oilwell Varco (NOV): NOV is a very small 1.11% of the US long portfolio stake established this quarter at prices between $48 and $56. The stock currently trades at $39.55.Stake Disposals:Canadian Natural Resources (CNQ): CNQ was a minutely small position established in Q4 2014. It was sold down by ~95% last quarter and eliminated this quarter. The position size was too small to indicate a clear bias.Stake Increases:Sears Holdings Corp (SHLD): SHLD is Berkowitz’s third largest position at 14.46% of the US long portfolio. The original stake was established in 2007 although the position size has fluctuated over the years. Last two years saw consistent buying and the share count increased from around 16.8M shares to 26.6M shares. This quarter also saw a minor increase. The current stock price ($25.18) is far below Fairholme’s cost-basis. The pattern of buying signifies a strong bullish bias. For investors attempting to follow Berkowitz, SHLD is a very good option to consider: he controls ~25% of the business.Note 1: SHLD spun-off Seritage Growth Properties (SRG) through a Rights Offering in July. Fairholme participated and has accumulated 3.25M shares (13.2% of the business).Note 2: SHLD spun off Lands’ End in April 2014 and did a couple of rights offerings in October 2014. Details follow: a) Lands’ End (LE) was spun-off from SHLD whereby SHLD holders received LE shares at the ratio 0.300795:1, b) Sears Canada Rights: Sears Holdings Corporation distributed, at no charge, to holders of its outstanding common stock as at 5:00 p.m. on October 16, 2014, transferrable subscription rights entitling them to purchase common shares of Sears Canada Inc. held by Sears Holdings at a price of U.S. $9.50 per whole share, and c)  2019 unsecured debt & WTS Rights: Each subscription right consisted of a 8% senior unsecured note due 2019 and warrants to purchase common stock at a strike price of $28.41.Sears Canada (SRSC) and Sears WTS 28.41 Strike: These positions were established in Q4 2014 as a result of Fairholme participating in two rights offerings from Sears Holdings. The SRSC rights offering distributed one subscription right for each share of Sears Holdings held and it allowed the purchase of 0.375643 shares of Sears Canada at $9.50 per share. The rights would have resulted in the purchase of around 10M shares but Berkowitz ended up with ~40% more (oversubscription privilege). The Notes & WTS rights offering was for $625M in notes and 22M in warrants (strike $28.41 expiring in five years - 2019). Here again, the rights offering would have allowed the acquisition of around 6.1M warrants but Berkowitz ended up with 6.4M. This quarter saw a ~10% increase in SRSC and a marginal increase in SHLD WTS. SRSC stake is now at 1.99% and the stake in the warrants is at 1.96% of the US long portfolio.Stake Decreases:American International Group (AIG) & AIG WTS 45 Strike: AIG is Berkowitz’s largest position at 23.65% of the US long portfolio (37.42% including warrants). The stake in the common was reduced by ~54% last quarter at prices between $48.87 and $56.49 and that was followed with a ~21% reduction this quarter at prices between $54.79 and $63.32. The stake reductions started in Q4 2013 and the selling accelerated over the last two quarters: overall, the common stake was reduced by ~78% during the last seven quarters. The stock currently trades at $64.25. Warrants also saw marginal reductions in the last two quarters.Bank of America (BAC), WTS 13.30 Strike, and BAC WTS 30.79 Strike:  BAC is Berkowitz’s second largest position behind AIG at 26.12% of the US long portfolio. The stake was first purchased in 2010 and minor adjustments had since been made every quarter. Last quarter saw a ~19% reduction in the common and a ~8% increase in the warrants (Jan 2019 13.30 Strike, Yahoo Ticker - BAC-WTA, Current Quote - $6.96). This quarter saw a minor increase in the warrants and a marginal decrease in the common. The stock currently trades at $17.69.Berkshire Hathaway (BRK.B) (BRK.A): BRK.B is a very small 0.43% of the US long portfolio position. The stake was reduced by another 45% this quarter. As the position size is very small, the selling does not indicate a clear bias.St Joe Companies (JOE) & Leucadia National (LUK): JOE and LUK are large stakes at 7.78% and 6.08% of the US long portfolio respectively. The bulk of the JOE stake was purchased in the 2008-2009 timeframe and there have only been minor adjustments since. LUK is a very long-term holding that was built-up over several years. The last nine quarters have seen a ~35% reduction in LUK while the JOE stake has remained relatively steady - this quarter saw minor selling in JOE and a 11% reduction in LUK. Currently, JOE trades at $17.37 and LUK at $23.35. For investors attempting to follow Berkowitz, these are good options to consider for further research.Wells Fargo WTS 34.01 Strike: The warrants (October 2018 expiry, 34.01 Strike, Yahoo Ticker - WFC-WT, Current Quote - $23.45, Dividend Adjustment Threshold - $0.34) are a minutely small 0.34% position. It was reduced by 42% this quarter.Kept Steady:JP Morgan WTS 42.42 Strike and Lincoln National WTS 10.92 Strike: These are minutely small positions that were kept steady this quarter.The spreadsheet below highlights changes to Fairholme’s US stock holdings in Q2 2015:"