Bruce Berkowitz Bets Big on Sears, Fannie Mae, and Freddie Mac …

Bruce Berkowitz’sĀ comeback is tied to one heck of a value play: Sears Holdings (SHLD).

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Berkowitz’ $2.2 billion Fairholme Fund (FAIRX), which is some 90% lighter in terms of assets under management compared to its 2011 peak, also has big bets on government-backed mortgage financiers Fannie Mae and Freddie Mac. The mutual fund manager told WSJ’s Sarah Krouse: “The people who had the smoothest ride were those in Bernie Madoff. Life is not smooth.”

That’s certainly true for Fairholme Fund investors. The fund was in the red in 2014 and 2015, landing in the bottom decile of large-value fund peers. Though, last year the fund returned more than 25%, walloping 97% of fund peers, according to Morningstar.

Since Berkowitz took a stake in Sears late August 2005, shares have fallen more than 40% to a recent $8.42.


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