Graham And Doddsville

Bruce Berkowitz, founder of the Fairholme Fund, is one of my favorite investors.  I heard him speak several times as a student at Columbia.  Berkowitz has recently been making rounds in the media.  Berkowitz and his team arrive at intrinsic value by “counting the cash.”  He does this by adjusting financial statements to come up with an estimate of owner earnings.  I am working on a post about owner earnings, which should be posted shortly.  Once Berkowitz determines a company’s owner earnings yield, he then tries to “kill” the business.  Killing the business means trying to imagine every worse case scenario, and testing how that scenario will affect the company.  He looks to buy companies with a double digit owner earnings yield and solid management, that he can’t kill.

To learn from SuperInvestor Bruce Berkowitz, see below:

Interview on Bloomberg TV (12/9/2008)

“A Bargain Hunter Stands Tall” (Kiplinger.com)

An older Interview with Investment News from December 2007.