Bruce Berkowitz is an equity fund manager who was just named the decade's best domestic stock manger by Morningstar. Berkowitz is a boyish-looking man who has not been well-known by the public until now, but he is likely to get a lot more famous in the coming months. He manages the Fairholme Fund, which earned an impressive 13% return annually from 2000 through 2009, which was a far better performance than the S&P 500 managed in that roller coaster decade.
The fund was started in 1999, and is focused on about 15 to 25 securities. He doesn't want like too much diversification on the grounds that an overly diversified portfolio would mimic the overall market too much. Berkowitz is what is known as a value investor, and emulates the investment style of the enormously successful Warren Buffet, focusing on sound businesses that have large cash flows. He also looks for stocks that he sees as being very undervalued, and for opportunities in areas of the market that are not currently favored.
Although Bruce Berkowitz has a very impressive record so far, any prospective investor should remember that past performance is never a guarantee of future results. Investors should also remember the law of mean reversion, in which any trend tends to move back toward the average. There is no reason why Fairholme could not start to perform less well, and in fact that is more likely than the reverse scenario. A good example of this kind of thing happening recently was when Bill Miller, a manager at Legg Mason, outperformed the market for fifteen straight years but then took a very steep dive. Investing always involves risk and the bet fund managers in the world can bet wrong and lose money for their clients.
That being said, though, Bruce Berkowitz is a manager who certainly deserves more attention than he has received until now.