"Tracking Bruce Berkowitz’s Fairholme Portfolio – Q4 2020 Update"
"Bruce Berkowitz’s 13F stock portfolio value increased this quarter from $653M to $1.24B.The portfolio value almost doubled as St. Joe Companies had a stunning stock performance this quarter.The 13F portfolio is mostly invested in St. Joe Companies.This article is part of a series that provides an ongoing analysis of the changes made to Fairholme’s 13F stock portfolio on a quarterly basis. It is based on Fairholme’s regulatory  filed on 2/16/2021. Please visit our  article for an idea on how his holdings have progressed over the years and our  for the fund’s moves during Q3 2020.Berkowitz’s 13F stock portfolio value increased ~90% from $653M to $1.24B this quarter. The 13F portfolio currently has most of the assets invested in St. Joe Companies.Berkowitz’s flagship Fairholme Fund (FAIRX) has generated significant alpha since its December 1999 inception: the fund returned at an annualized rate of 10.64% compared to 6.63% for S&P 500 index through 2020. FAIRX has however underperformed over the most recent 10-year period. Of the ~$1.5B AUM, Cash and Equivalents are at ~22%, St. Joe stock at ~66%, Fannie/Freddie Pfds at ~11%, and Imperial Metals at ~2%. The other funds under Fairholme umbrella are Fairholme Focused Income Fund (FOCIX) and Fairholme Allocation Fund (FAAFX). Equity holdings that are not in the 13F report include Fannie Mae (FNMA) pfds, Freddie Mac (FMCC) pfds, and Imperial Metals (IPMLF).New Stakes:Cincinnati Financial (CINF), Enbridge Inc. (ENB), CVS Health (CVS), Old Republic International (ORI), Altria Group (MO), Enterprise Product Partners (EPD), Plains All American Pipeline (PAA), Magellan Midstream (MMP), and Philip Morris (PM): These are very small (less than ~0.7% of the portfolio each) new stakes established this quarter.Stake Disposals:Kraft Heinz (KHC): The 1.22% KHC stake was established in Q1 2020 at prices between ~$20 and ~$32 and it is now at $39.55. Last quarter saw a ~40% reduction at prices between ~$29 and ~$36. The disposal this quarter was at prices between ~$29 and ~$35.Simon Property Group (SPG): The 0.52% SPG position was established in Q1 2020 at prices between ~$45 and ~$150. Next quarter saw a ~40% selling at prices between ~$44 and ~$96 while last quarter there was a ~80% stake increase at prices between ~$60 and ~$74. The stake was disposed this quarter at prices between ~$61 and ~$94. SPG currently trades at ~$115.Stake Increases:Bank of America (BAC), Canadian Natural Resources (CNQ), AT&T Inc. (T), Kinder Morgan (KMI), and Energy Transfer LP (ET): These small stakes established last quarter were increased substantially this quarter. The 1.19% BAC stake was established at prices between ~$22.50 and ~$30 and it is now at $37.66. CNQ is a small 0.93% of the portfolio position built at prices between ~$21 and ~$32 and it currently trades at ~$37. The 0.90% AT&T stake was purchased at prices between ~$26.50 and ~$31.50 and it now goes for ~$30. The 0.70% KMI position saw a ~220% stake increase this quarter at prices between ~$11.50 and ~$15 and it currently trades at $15.78. ET is a 0.39% of the portfolio position purchased at prices between ~$5 and ~$7 and it is now at $8.10.Western Midstream Partners (WES): WES was a minutely small stake purchased in Q1 2020 at prices between ~$3 and ~$22. Last quarter saw a ~85% stake increase to a ~0.66% portfolio stake at prices between $7.35 and $10.50. The stock is now at $18.25. This quarter saw a minor increase.Stake Decreases:St Joe Companies (JOE): ~91% of Fairholme’s 13F assets are in St. Joe stock. The bulk of the position was purchased in the 2008-2009 timeframe and there have only been minor adjustments since. Last three quarters of 2017 had seen a combined ~14% increase at prices between $16.35 and $19.55. The stock is now at $47.29. There was marginal trimming this quarter.Note 1: Regulatory filings since the quarter ended show them owning 25.76M shares (~44% of business) of JOE. This is compared to 26.43M shares in the 13F report.Note 2: Fairholme’s 2020 report mentions the following as the reasons for their continued bullishness: robust pricing, strong sales, and the fact that their entitled lands in Walton, Bay, and Gulf Counties may be worth exponentially more than implied by the company’s market value. Fairholme’s mid-year 2020 report also pointed to St. Joe’s project update .Berkshire Hathaway (BRK.A) (BRK.B): Q1 2019 saw a 5.6% of the portfolio stake purchased at prices between $188 and $209. The position was reduced by ~85% to a very small 0.84% portfolio stake next quarter at prices between $197 and $219. Q1 2020 saw a ~9% portfolio stake built at prices between ~$162 and ~$230. There was a one-third increase next quarter at prices between $170 and $202. This quarter saw a ~80% selling at prices between ~$201 and ~$234. The stock currently trades at ~$250 and the stake is at ~1.12% of the portfolio.Kept Steady:Apple Inc. (AAPL) and Occidental Petroleum (OXY) WTS: These two minutely small stakes (less than ~0.1% of the portfolio each) were kept steady this quarter.The spreadsheet below highlights changes to Fairholme’s 13F stock holdings in Q4 2020:Source: John Vincent. Data constructed from Fairholme's 13F filings for Q3 and Q4 2020.Regulatory filings thru 11/28/2020: None."