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By Michael Breen | 02-03-2010 11:39 AM

What Bothers Berkowitz about Pharma

The Fairholme manager explains the reasoning behind recent stock sales--including Pfizer--and the portfolio's shift from defense to offense.

Mike Breen: Greetings, this is Mike Breen from Morningstar in Chicago. I am speaking via phone today with Bruce Berkowitz, the manager of the Fairholme Fund.

How are you, Bruce?

Bruce Berkowitz: I am great. Good talking with you, Mike.

Breen: Bruce was recently named Morningstar's Domestic Equity Fund Manager of the Year for 2009, but also the Fund Manager of the Decade, for the past decade. Congratulations, Bruce.

Berkowitz: Thanks. Thanks to Morningstar.

Breen: No problem, we just call them as we see them. And for background, the Fairholme Fund returned about 13% a year over the past decade, during a time when the S&P 500 basically broke even.

Bruce and his team made a series of remakes to the portfolio over that time, selling things when they were high and getting into cheaper areas--very successful. Congratulations, Bruce.

Berkowitz: Thanks. That was the last decade; now it is time to move on.

Breen: Absolutely. As we discussed before, that concludes the history portion of the interview. Now we will move into the "what have you done for me lately" phase of it.

Your new portfolio just came out just the other day, and you have actually made quite a few moves with the Fairholme Fund. Maybe you could start by letting us know about a few things that you have sold recently that previously were substantial positions in the portfolio.

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