Fairholme halves its Regions stake and more.
For the first time in more than 25 years, iconoclastic asset manager FPA has filed to launch a new fund. FPA's ability to carve its own path has led to superior returns for some of its funds, so it wouldn't be surprising if the new fund, FPA International Value, has a distinctive profile.
FPA nabbed two former Oakmark analysts--Pierre Py and Eric Bokota--to run the
new strategy. While this is the duo's first time managing an open-end mutual
fund, it's expected that they will be given the same amount of freedom to run
their portfolio as other FPA managers. Founder Bob Rodriguez and other FPA
principals, like Steve Romick, manager of FPA Crescent
For example, Rodriguez, who manages FPA Capital
Although the new managers tapped for FPA Intentional Value are unproven,
other analysts like them who have worked for David Herro on Oakmark
Py and Bokota's having worked together using Herro's deep-value philosophy could help with the transition given FPA's own deep-value approach. However, any manager risk is compounded by an initial expense ratio of 1.98%, which is much higher than Oakmark International's 1.08%. That doesn't leave a lot of room for the pair to make mistakes.
The new fund, which FPA hopes to launch later this year, highlights the
firm's greater international focus. FPA Crescent's overseas exposure is up to
nearly 17% as of September 2011, and FPA Paramount
Berkowitz Sells Off a Portion of Regions
The fund has seen $4.7 billion in net outflow through September, and the
fund's cash position has dwindled amid redemptions, declining to 4.4% as of May
31 (the most recent disclosure of the fund's holdings) from 25% in February this
year. The fund's total assets are down 50% from a year ago amid the fund's poor
performance. Berkowitz has made eye-popping bets on some of the most bedeviled
and controversial financial stocks in 2011, bringing Fairholme's stake in the
sector to roughly 75% as of May 31. Steep declines in Bank of America
Regions said in its filing that Berkowitz sold about half of the fund's investment, bringing the market size of the position to 56.5 million shares, or just under 5% of the bank's shares outstanding as of the end of the third quarter. The Regions stake was 5.25% of the portfolio as of May 31.