Famed mutual fund manager
seems satisfied with his
)'s positioning - he made few adjustments in the fourth quarter.
He made headlines in 2009 and 2010 for weighting his portfolio
heavily in troubled financials, whose recovery delayed, leaving
him with a year of unprecedented bad performance. In 2011, he
lost 32.42%, compared to a modest gain for the S&P index.
"Staying the course" in 2012, however, earned him a 35.81% return
ahead of 16% for the S&P, for the year, and well ahead for
the long term - with a 11.38% average annual return since
inception in 1999, versus the S&P's 1.69%.
The fund contains 13 stocks, one more than the third quarter,
with the addition of Sears Canada Inc. (
). He also added slightly to Leucadia National Corporation (
), and decreased his positioning in American International Group
) and CIT Group (
his fourth quarter letter
, Berkowitz said he expects after the volatility for his fund to
touch new highs soon. He cites positive factors in the macro
environment, such as the U.S. being in its fourth year of
recovery, housing prices increasing, unemployment declining and
interest rates remaining at record lows.
He also believes his holdings are "cheap relative to underlying
equity values - as cheap as in the beginning of 2012," and is
"bullish on America."
New Holding: Sears Canada Inc. (
Berkowitz in the fourth quarter bought 6,087,327 shares of Sears
Canada Inc., valued at $68.33 million, in the fourth quarter.
This amounts to 1% of his portfolio, and his makes it his ninth
Headquartered in Toronto, Sears Canada was formed in 1952, and
currently owns 118 department stores, 48 free-standing Sears Home
stores, 11 outlet stores, 4 floor covering centers and 4
appliance and mattress stores, along with several other types of
specialty stores, services and subsidiaries.
U.S. retailer Sears (
) owns a 51% stake in Sears Canada.
, chairman and CEO of Sears Holdings Corporation and founder of
hedge fund ESL Management, owns a 27% stake in Sears Canada.
Berkowitz likely received his Sears Canada shares as part of a
partial spinoff of one of his other stocks, Sears Holdings. In
November, Sears Holdings distributed 44.5% of its common shares
of Sears Canada to Sears Holdings common stock holders. This
drained the percentage of the company it owned from 96% to 44.5%.
Sears Holdings shareholders received 0.4283 Sears Canada common
shares for every share they owned of Sears Holdings, effective on
According to GuruFocus global coverage, Sears Canada's revenue
per share has experienced a 5% decline rate over the past five
years. EBITDA fell at a rate of 36.8%, free cash flow at a rate
of 64.7% and book value at 0.5%, over the same period.
Currently, it has a 10.1 P/E, 0.87 P/B and 0.2237 P/S.
TSX:SCC data by GuruFocus.com
Add: Leucadia National Corporation (
Berkowitz increased his position in Leucadia National Corp. by
0.35%, or 42,700 shares with an average cost of $23. After the
purchase, he owns a total of 12,229,050 shares of the company, or
5% of shares outstanding.
Leucadia in November came within a dollar of its 52-week low
It is a holding company with subsidiaries that span the range
from beef processing to oil and gas drilling. Additionally, in
the third quarter of 2012 it acquired all of Jefferies Inc. (
) after owning an interest for years, and eliminated its holding
of Mueller Industries Inc. (
Leucadia's revenue has been growing since 2007. In 2011, it
reached $1.57 billion. Most years of the past decade the company
was profitable, with the exception of a $2.5 billion loss in
2008. Cash flow is less predictable, with only three years of
positive generation since 2002.
Approximately $1.48 billion in cash resides on Leucadia's balance
sheet. And, wary of leverage, it carries $1.25 billion in
long-term liabilities and debt.
Helming Leucadia is GuruFocus Guru Ian Cumming, who wrote in his
2011 annual letter that, though cautious, his team is
"enthusiastic about the future of our broad array of operating
businesses and investments and have our eyes open for additional
Cumming also noted the lack of correlation between its book value
and share price growth: Though both have recovered from their
Great Recession troughs, the share price has a ways to go to
return to pre-recession levels, he said.
Currently, the P/E of Leucadia is 11.7, P/B is 1 and P/S is 0.89.
LUK data by GuruFocus.com
See Bruce Berkowitz's other fourth quarter moves and holding
history in his portfolio here. Also check out the undervalued
stocks, top growth companies and high yield stocks of Bruce
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