We Study Billionaires - The Investor’s Podcast Network

RWH041: Ignore the Crowd w/ Super-investor Bruce Berkowitz

Feb 18, 2024

01:55:17

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Bruce Berkowitz shares insights on his investment strategy, cash as 'financial valium,' bets on one stock, long-term trends in energy sector, and past failures with Sears & banking stocks. He emphasizes the importance of family, cash flow, and aligning investments with long-term trends.

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Quick takeaways

Bruce Berkowitz emphasizes the importance of making huge bets on a tiny number of stocks for optimal returns.

His approach to investing involves focusing on long-term trends and businesses that can withstand market challenges for durable investments.

Berkowitz's investment strategy has evolved over time due to experiences with major companies, leading him to reassess and adapt his approach.

Understanding the true value of assets and the implications of marking assets to market is crucial for achieving long-term success in investing.

Deep dives

St. Joe Company: A Multi-Decade Wave to Surf

St. Joe Company, a real estate company in Northwest Florida, is experiencing significant growth due to the migration trends in the region. With a strategic location and attractive land assets, St. Joe is capitalizing on the increasing population and demand for quality living. The company aims to create sustainable investments that can stand the test of time. The growth potential in Northwest Florida, along with St. Joe's focus on developing communities, hotels, and apartments, is expected to contribute to its future success.

The Importance of Tolerance and Flexibility in Maintaining Work-Life Balance

01:54

Enterprise: A Reliable Investment with Diverse Income Streams

01:02

The Power of Cash in Financial Planning

01:42

Florida's Population Growth and the Multi-decade Wave

00:23

Introduction

3min

Rise, Fall, and Resilience of a Mutual Fund Manager

4min

Cash Flow Management and Investment Decisions

17min

Lessons From Father and Early Financial Experiences

11min

Investing Strategy: Concentrated Portfolio and In-Depth Business Understanding

5min

The Concentrated Portfolio Strategy of a Super-Investor

15min

Analyzing Enterprise Product Partners and Investment Strategies

15min

Government's Unpredictability in Financial Matters

5min

Navigating Investment Challenges and Personal Growth

23min

10.

Evolution of a Successful Investor

18min

11.

Exploring the Depths of Research and Investing

2min

12.

Intense Focus and Conviction in Investing

2min

In this episode, William Green chats with famed investor Bruce Berkowitz, whose Fairholme Fund has beaten the S&P 500 by 529 percentage points over 23 years. Bruce, who was named Morningstar’s Domestic Stock-Fund Manager of the Decade in 2009, talks here about the ups & downs of his volatile career, how he changed his investment strategy after three costly losses, why he likes cash as a kind of “financial valium,” & why 80% of his fund is riding on one stock.

IN THIS EPISODE, YOU’LL LEARN:

00:00 - Intro

04:44 - What Bruce Berkowitz learned about odds by working as a bookmaker.

06:26 - What his stint as a broker taught him about how not to invest.

34:18 - Why he makes huge bets on a tiny number of stocks.

41:53 - How he’s riding a multi-decade wave of migration to Florida.

48:57 - How he justifies betting 80% of his fund on one stock.

54:59 - How he’s playing long-term trends in the energy sector.

56:56 - Why he’s changed the way he invests.

59:08 - Why he’s acutely wary of bank stocks.

59:20 - What he learned from losing big on Sears, Fannie Mae, & Freddie Mac.

1:17:53 - Why he views cash as a valuable form of “financial valium.”

1:28:51 - How he assesses the investment threat of global warming.

1:33:50 - Why he operates as a lone wolf, not part of a team.

1:39:53 - What he’s tried to teach his three children.

1:45:31 - How he handles setbacks.

Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.

BOOKS AND RESOURCES

Bruce Berkowitz’s investment firm, Fairholme Funds.
Vaclav Smil’s book How the World Really Works.
Vaclav Smil’s book Energy & Civilization.
William Green’s book, “Richer, Wiser, Happier” – read the reviews of this book.
Follow William Green on X (AKA Twitter).
Check out all the books mentioned and discussed in our podcast episodes here.

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