Investing Insights From a Top Fund Manager

Morningstar's 2009 manager of the year, Bruce Berkowitz, says that his best investments have been those shunned by the crowd.

Bruce Berkowitz, founder of Fairholme Fund (symbol FAIRX), was without question one of the most talented value investors to burst on the scene during the Noughties. In the ten years through February 16, Fairholme, a member of the Kiplinger 25, returned an annualized 14%. That was an average of 15 percentage points per year better than the sad performance of Standard & Poor’s 500-stock index. No wonder Morningstar recently named Berkowitz its domestic stock manager of the decade and manager of the year for 2009.

Here’s something else to chew over. In our conversations with Berkowitz, who co-manages Fairholme with Charles Fernandez, we are struck by how often he references his investing idols: Berkshire Hathaway’s Warren Buffett, and Ian Cumming and Joseph Steinberg, the talented but low-profile duo of Leucadia National Corp. (both stocks are major holdings of Fairholme). Over the past decade, shares of Berkshire (BRK-B) have returned 9% annualized and those of Leucadia (LUK), a New York City-based conglomerate, have gained 13% annualized. So Berkowitz has even outperformed his role models.

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Contributing Writer, Kiplinger's Personal Finance

Andrew Tanzer is an editorial consultant and investment writer. After working as a journalist for 25 years at magazines that included Forbes and Kiplinger’s Personal Finance, he served as a senior research analyst and investment writer at a leading New York-based financial advisor. Andrew currently writes for several large hedge and mutual funds, private wealth advisors, and a major bank. He earned a BA in East Asian Studies from Wesleyan University, an MS in Journalism from the Columbia Graduate School of Journalism, and holds both CFA and CFP® designations.