BRUCE BERKOWITZ
Morningstar's Fund Manager of the Decade who went from hero to cautionary tale with massive concentrated bets on Sears and Fannie Mae
Morningstar named him Domestic Stock Fund Manager of the Decade in 2010. By 2019 his Fairholme Fund was down 70% from its 2007 peak and had lost more money than almost any fund in its category. What happened? He put 25% of the fund in Sears and another 25% in Fannie Mae. One went bankrupt. The other is still in government conservatorship a decade and a half later. Berkowitz is the ultimate cautionary tale about what happens when conviction becomes stubbornness.
Net Worth
$800 million
Nationality
American
Time Horizon
Long-Term
Risk Appetite
9 / 10
CAREER & BACKGROUND
Founded Fairholme Capital Management in 1997 and launched the Fairholme Fund (FAIRX). The fund returned over 300% from 1999 to 2010, massively outperforming the S&P 500.
Named Morningstar Domestic Stock Fund Manager of the Decade for the 2000-2009 period. Made huge contrarian bets on financial stocks during the 2008 crisis — buying Bank of America, AIG, and Goldman Sachs at their lows — and was rewarded handsomely.
Then concentrated heavily in Sears Holdings and Fannie Mae/Freddie Mac preferred shares. Sears went bankrupt in 2018.
Fannie Mae and Freddie Mac remain in government conservatorship. The Fairholme Fund declined roughly 70% from its 2007 high by 2019.
AUM collapsed from over $20 billion at peak to under $2 billion. Berkowitz is also involved in Miami real estate development.
COMPANIES & ROLES
Fairholme Capital Management (founder/CIO), Fairholme Fund (FAIRX)
INVESTING STYLE & PHILOSOPHY
Ultra-concentrated deep value. Berkowitz typically holds 5-10 positions and is willing to put 20-30% of the fund in a single name.
He looks for businesses trading far below intrinsic value, often in distressed or heavily shorted sectors. He is a classic contrarian who buys when others are panicking.
The problem is that he sometimes holds on long after the thesis has broken.
THE PLAYBOOK
Risk Approach
Extremely high. Berkowitz runs one of the most concentrated mutual funds in existence.
A 25% position in a single stock means one bad bet can destroy years of returns. He has demonstrated that he will ride losing positions all the way to zero rather than admit a mistake — Sears being the prime example.
Money Habits
Based in Miami, where he has become involved in real estate development through entities connected to Fairholme. He purchased the Miami Herald building site and other properties.
His lifestyle is relatively private. He has donated to University of Miami and other Florida institutions.
BIGGEST WIN
His financial crisis bets. Buying Bank of America, AIG, and Goldman Sachs at panic-level prices in 2008-2009 generated enormous returns and cemented his reputation as a fearless contrarian.
These were exactly the kind of fat-pitch opportunities that value investors dream about, and Berkowitz swung hard.
BIGGEST MISTAKE
Sears Holdings. Berkowitz believed Eddie Lampert could turn Sears around and bet heavily on the thesis.
He held as the stock declined from over $100 to zero. Sears filed for bankruptcy in October 2018.
The Fairholme Fund lost hundreds of millions. His other major holding — Fannie Mae preferred shares — was a bet on the government releasing Fannie from conservatorship.
As of 2026, that still has not happened. Combined, these two positions turned one of the best track records in mutual fund history into one of the worst.
FINANCIAL PHILOSOPHY
Berkowitz believes in ignoring the crowd, buying what is cheap, and waiting for the market to come to him. He frequently quotes Warren Buffett and Benjamin Graham.
His philosophy is sound in theory — buy dollar bills for fifty cents — but his execution has shown the danger of holding losers too long and confusing stubbornness with conviction.
FAMILY & PERSONAL LIFE
Private about personal life. Based in Miami, Florida.
EDUCATION
Degree from the University of Massachusetts Amherst. CFA charterholder.
Started his career at Merrill Lynch, Smith Barney, and Lehman Brothers before founding Fairholme.
BOOKS & RESOURCES
Security Analysis by Graham and Dodd, Berkowitz frequently cites Warren Buffett's annual letters and has called Buffett the single greatest influence on his investing approach
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QUOTES (6)
I look for companies that are hated and misunderstood. That is where the biggest discounts are.
The time to buy is when there is blood in the streets. Even if it is your own blood.
I made a lot of money for a long time and then I gave a lot of it back. That is the story of concentrated investing.
The secret to investing is to figure out the value of something and then pay a lot less.
If you cannot stomach a 50 percent decline in your investment you should not be in equities.
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