Tusho This helped him outperform his peers in But the plan fizzled. Never Miss A Story! This copy is for your personal, non-commercial use only. Essentially, he looks for free cashflows that he can buy very cheaply. How Bruce Berkowitz stumbled with AIG Fortune This strategy worked well in the mid s when he held outsize positions in energy stocks, but has hurt performance since then.
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For the best Barrons. He built a large position in when the US Treasury owned 92 percent of the company. The American International Group Inc. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. Subscribe to ValueWalk Newsletter. Check out our H2 hedge fund letters here. Do you think that will happen with AIG? I mean, if you take a look now at the amount of the government shares, beerkowitz government is going to do great.
He also uses relatively high cash holdings to limit volatility. He expected the Treasury stake to be sold at book value, but it was ultimately sold back to the market at a deep discount. Berkowitz bets on the jockey as much as on the horse; he looks for companies that are built to survive in any environment with strong management.
Berkowitz was mum on AIG AIG this year until yesterday, when the Wall Street Journal first reported that he took his lumps and told his investors in a conference call that he had made a critical error.
He favors simple business models and has tended to stick to financials, retailers, energy companies, metal producers and real estate stocks. Another problematic investment for Berkowitz was AIG. Bruce Berkowitz Comments on AIG — He is a strong believer in business cyclesand looks for companies that are out of favor due to the current business cycle. AIG is taking to the road this week to entice prospective investors. Cashflow is King Berkowitz is a contrarian investor and invests in companies with reliable cashflows that are trading at attractive levels relative to those cashflows.
For non-personal use or to order multiple copies, please contact Dow Jones Reprints at or visit www. It berkowitzz owns 1. This strategy worked well in the mid s when he held outsize positions in energy stocks, but has hurt performance since then. AIG headquarters office stands in New York. The list value of stock holdings is down The government had nruce pretty good record selling its shares in Citi without hurting the stock price. Capital gains are generated inside a fund when a manager sells winning positions.
Firstly, he has avoided the technology sector which is where most of the index gains have accrued. Berkowitz is a contrarian investor and invests in companies with reliable cashflows that are trading at attractive levels relative to those cashflows. Shorts, cash positions, foreign investments and other assets are not included. Qualifying assets include long positions in U. We determined that it was an opportune time to realize the gain and began to reduce the position in AIG common stock.
On the conference call with investors, Berkowitz ended his prepared remarks on AIG with a curious quote attributable to two value-investing luminaries. The significance of his miscalculation is obvious: The year-old fund manager looked especially smart last year while amassing 40 million shares of the insurance giant.
Whether AIG is rehabilitated remains to be seen. Previous interviews with Fortune indicate as much. Thank you This article has been sent to. This copy is for your personal, non-commercial use only. Article by Brian Dentino, Finbox. He moved to London in to join Merrill Lynch. Related Posts
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