Fairholme Funds 2007 Annual Report

The unexpected happens more frequently and with more severity than most expect. Accordingly, cash remains a sizeable chunk of the portfolio. As demonstrated this year, cash helped the Fund to weather portfolio headwinds and allowed the Fund to buy without the need to sell already inexpensive securities on the cheap. Shareholders should not fear a temporary decline in the Fund’s NAV, as lower prices for sound investments usually indicate better bargains and higher future returns — particularly with cash hoarded for such chances. As a cagey old veteran of Wall Street once said, “You make your best money in a bear market; you just don't know it at the time….”

Direct Link - Fairholme Funds 2007 Annual Report. (PDF)

Morningstar Interview with Larry Pitkowsky of the Fairholme Fund

• Part-1 : Betting on the Jockey

• In late 2007, Morningstar interviewed Larry Pitkowsky of the Fairholme Fund (FAIRX). In part one, he discuss Fairholme's focus on "betting on the jockey" as well as the role that cash plays in their portfolio construction.
  
• Part-2 : Digging Deeper into a Large-Cap Fund Pick
• In part two of our discussion, we dig deeper into the Fairholme Fund's search strategy and portfolio construction, which has several similarities to my approach in managing the Morningstar Ultimate Stock-Picker's Portfolio. We also touch on two asset-rich companies that have recently migrated onto my watch list.