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Berkowitz on Opportunity in Bankruptcies

The Fairholme manager comments on the fund's significant investment in the convertible bonds and bank debt of bankrupt mall operator General Growth Properties.

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Michael Breen: You touched on your flexibility and how a dollar doesn't care where it comes from and how it is made. Your fund has a pretty flexible mandate, and you can invest in different spots on the capital structure. Can you touch on that, and what you are seeing right now in addition to equity convertible debt floating rate notes, other types of vehicles that you're looking at?

Bruce Berkowitz: Absolutely. As we study the equity of companies, you just have to study the companies. And we take a look at the entire capital structure of a company, from bank debt to senior secured, senior unsecured, subordinated debt, preferred stock, common stock, and look to understand the returns on each part of the capital structure.

Michael Breen does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.