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Fund Times

Fairholme Doubles Down on AIG Amid Continued Outflows

Manager exits at Columbia and John Hancock could signal more change for funds.

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 Fairholme Fund  (FAIRX) manager Bruce Berkowitz had said that he would add to the fund's position in insurer  American International Group (AIG) when the company issued new shares in May, and he wasn't kidding. Fairholme's May 31 portfolio reveals that Berkowitz more than doubled the fund's AIG position to 18.2% of assets, including warrants. (As a nondiversified fund, Fairholme is free to invest more than 5% of assets in a given company.)

That's relatively conservative, though, compared with the concentrated bets in the May 31 portfolios of smaller siblings Fairholme Allocation (FAAFX) and  Fairholme Focused Income (FOCIX). Allocation, which is even less constrained than its larger sibling, has 27% of its assets in bond insurer MBIA (MBI) and 23.6% in AIG. Focused Income has 23.9% of its portfolio in various MBIA bonds. Both funds have about 15% of assets in cash.

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Susan Daker does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.