No. of Recommendations: 2
Bruce Berkowitz’s Fairholme Focused Income Fund just issued their 2012 yearend shareholder letter.

They are making a highly concentrated bet on MBIA(38%) and Sears(17%) junk debt. They also hold 40% in cash and Tbills.

Quotes from the shareholders letter:

“We expect MBIA’s lawsuits against Bank of America and its division Countrywide over representations and warranties on mortgages insured by MBIA to settle. A positive result should lift MBIA bonds. A negative result appears to be priced in to today’s marketplace.”

“We believe that Sears will continue to pay all scheduled interest and principal on its debt obligations.”

link to shareholder letter:
http://www.fairholmefunds.com/sites/default/files/FOCIX%20Ja...

link to Bloomberg article:
http://www.bloomberg.com/news/2013-02-01/berkowitz-expects-w...
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