U.S. markets open in 6 hours 54 minutes
  • S&P Futures

    3,800.00
    +9.50 (+0.25%)
     
  • Dow Futures

    30,844.00
    +16.00 (+0.05%)
     
  • Nasdaq Futures

    13,064.25
    +78.75 (+0.61%)
     
  • Russell 2000 Futures

    2,142.80
    -4.50 (-0.21%)
     
  • Crude Oil

    53.45
    +0.47 (+0.89%)
     
  • Gold

    1,854.00
    +13.80 (+0.75%)
     
  • Silver

    25.57
    +0.25 (+0.97%)
     
  • EUR/USD

    1.2158
    +0.0025 (+0.21%)
     
  • 10-Yr Bond

    1.0920
    0.0000 (0.00%)
     
  • Vix

    23.24
    -1.10 (-4.52%)
     
  • GBP/USD

    1.3662
    +0.0028 (+0.20%)
     
  • USD/JPY

    103.7500
    -0.1420 (-0.14%)
     
  • BTC-USD

    35,745.86
    -148.40 (-0.41%)
     
  • CMC Crypto 200

    709.57
    -5.62 (-0.79%)
     
  • FTSE 100

    6,712.95
    -7.70 (-0.11%)
     
  • Nikkei 225

    28,523.26
    -110.20 (-0.38%)
     

Bruce Berkowitz's Top 4 Buys in the 3rd Quarter

GuruFocus.com
·3 min read

- By James Li

Bruce Berkowitz (Trades, Portfolio), founder and managing member of the Fairholme Fund (Trades, Portfolio), disclosed this week that his top four buys during the third quarter were Bank of America Corp. (NYSE:BAC), AT&T Inc. (NYSE:T), Canadian Natural Resources Ltd. (NYSE:CNQ) and Kinder Morgan Inc. (NYSE:KMI).


Managing a portfolio of just 13 stocks, Berkowitz believes that the more diversified the portfolio is, the more likely that the portfolio performance will be average. The guru follows Benjamin Graham's investing philosophy by purchasing stocks of companies with strong management teams, high potential of free cash flow generation and deeply-low valuations. Berkowitz may sometimes also purchase the stock of companies in which a catalyst could narrow the gap between its market price and intrinsic value.

Bruce Berkowitz's Top 4 Buys in the 3rd Quarter
Bruce Berkowitz's Top 4 Buys in the 3rd Quarter

Fairholme's $653 million equity portfolio had a 4% turnover ratio during the quarter, with an 84.11% weight in real estate and a 11.63% weight in financial services.

Bruce Berkowitz's Top 4 Buys in the 3rd Quarter
Bruce Berkowitz's Top 4 Buys in the 3rd Quarter

Bank of America

Berkowitz purchased 337,400 shares of Bank of America, giving the holding 1.25% weight in the equity portfolio. Shares averaged $24.90 during the third quarter.

Bruce Berkowitz's Top 4 Buys in the 3rd Quarter
Bruce Berkowitz's Top 4 Buys in the 3rd Quarter

GuruFocus ranks the Charlotte-based bank's financial strength 3 out of 10 on the back of cash-to-debt and debt-to-equity ratios underperforming more than half of global competitors, suggesting high financial leverage compared to stocks from other market sectors.

Bruce Berkowitz's Top 4 Buys in the 3rd Quarter
Bruce Berkowitz's Top 4 Buys in the 3rd Quarter

Warren Buffett (Trades, Portfolio)'s Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) owns over 1 billion shares of Bank of America as of third-quarter-end, giving the position 10.63% weight in its $229 billion equity portfolio.

Bruce Berkowitz's Top 4 Buys in the 3rd Quarter
Bruce Berkowitz's Top 4 Buys in the 3rd Quarter

Other gurus with holdings in Bank of America include Dodge & Cox and PRIMECAP Management (Trades, Portfolio).

Bruce Berkowitz's Top 4 Buys in the 3rd Quarter
Bruce Berkowitz's Top 4 Buys in the 3rd Quarter

AT&T

Berkowitz purchased 229,500 shares of AT&T, giving the position 1% equity portfolio weight. Shares averaged $29.59 during the third quarter.

Bruce Berkowitz's Top 4 Buys in the 3rd Quarter
Bruce Berkowitz's Top 4 Buys in the 3rd Quarter

GuruFocus ranks the Dallas-based telecom company's profitability 6 out of 10 on the back of a high Piotroski F-score of 7 and an operating margin that has increased approximately 5% per year on average over the past five years and is outperforming over 69% of global competitors.

Bruce Berkowitz's Top 4 Buys in the 3rd Quarter
Bruce Berkowitz's Top 4 Buys in the 3rd Quarter

Gurus with large holdings in AT&T include Pioneer Investments (Trades, Portfolio) and David Tepper (Trades, Portfolio)'s Appaloosa Management.

Bruce Berkowitz's Top 4 Buys in the 3rd Quarter
Bruce Berkowitz's Top 4 Buys in the 3rd Quarter

Canadian Natural Resources

Berkowitz purchased 290,500 shares of Canadian Natural Resources, giving the position 0.71% weight in the equity portfolio. Shares averaged $18.40 during the third quarter.

Bruce Berkowitz's Top 4 Buys in the 3rd Quarter
Bruce Berkowitz's Top 4 Buys in the 3rd Quarter

GuruFocus ranks the Calgary, Alberta-based energy company's profitability 6 out of 10 on the back of returns and three-year revenue and earnings growth rates outperforming over 60% of global competitors.

Bruce Berkowitz's Top 4 Buys in the 3rd Quarter
Bruce Berkowitz's Top 4 Buys in the 3rd Quarter

Kinder Morgan

Berkowitz purchased 196,600 shares of Kinder Morgan, giving the holding 0.37% equity portfolio weight. Shares averaged $13.95 during the third quarter.

Bruce Berkowitz's Top 4 Buys in the 3rd Quarter
Bruce Berkowitz's Top 4 Buys in the 3rd Quarter

GuruFocus ranks the Houston-based energy company's profitability 6 out of 10 on the back of operating margins outperforming over 88.23% of global competitors, yet offset by a three-year revenue decline rate of 0.1%, which underperforms over 65% of global energy companies.

Bruce Berkowitz's Top 4 Buys in the 3rd Quarter
Bruce Berkowitz's Top 4 Buys in the 3rd Quarter

Disclosure: No positions.

Read more here:

  • David Tepper Plunges Into PG&E in the 3rd Quarter

  • Muhlenkamp & Co.'s Top 4 Trades of the 3rd Quarter

  • Top 3rd-Quarter Trades of Ray Dalio's Bridgewater



Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

This article first appeared on GuruFocus.