This is an extended version of the profile that appeared in the May issue of Investment Advisor, part of AdvisorOne's Special Report profiling this year's members of the IA 25, the most influential people in and around the advisor universe. See the complete list and Special Report schedule for extended profiles of all the 2011 members of the IA 25.
Bruce Berkowitz is the man(ager) of the moment—which always sounds nice, but is usually fleeting (Legg Mason’s Bill Miller anyone?).
Referred to as the “megamind of Miami” by Fortune, and an avid speed walker, Berkowitz founded the Fairholme Fund 11 years ago. Now with $17 billion in assets under management, it claims a five-year total return of 9.97% and a 10-year total return of 11.46% (as of Dec. 31, 2010). Its performance has earned the fund five stars and Berkowitz the title not just of 2009 U.S. stock-fund manager of the year from Morningstar, but also domestic stock fund manager of the decade (along with such unknowns as Bill Gross and David Herro).
However, despite the accolades, Berkowitz’s Bill Miller-style missteps may already have begun.
“This year, his performance is actually at the bottom of his peer group,” says Morningstar analyst Kevin McDevitt. “And actually his overall performance has significantly lagged over the past 12 months.”
But McDevitt is quick to note that Berkowitz’s contrarian view and unconventional approach means he will have periods of underperformance. Indeed, McDevitt is surprised it hasn’t happened sooner.
“When you look at his calendar returns, his underperformance has been so rare,” he says. “The last time it happened was in 2003.”
McDevitt recently met with Berkowitz in his home office in Miami, and was particularly impressed with his understanding of financial service and insurance companies; something McDevitt says is surprisingly rare among fund managers due to the companies’ complexity. However, it’s Berkowitz’s investment in AIG that is causing a large part of his predicament woes at the moment, something that also torpedoed Miller’s run.
So whether Berkowitz will eventually end up a modern-day Miller, or remain Miami’s megamind, has yet to play out. But for his stratospheric run over the past decade, we proudly include him on this year’s list.
Read more about the rest of the IA 25.
Don't see someone on this year's IA 25 that you think belongs there? Submit their name and your justification for why they should be considered among the most influential people in and around the advisor universe in the Comments field below. We promise to consider reader nominations, but please, no ad hominem attacks on those who were named in this or past years.--Ed.