Big redemptions hit Fairholme

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Fairholme Capital’s Bruce Berkowitz got hit with a big wave of redemptions last quarter.

Through the end of September, investors have pulled nearly $4.7 billion in redemptions from Fairholme, according to BusinessWeek, which says:

During the quarter ended August 31, the fund’s net assets shrank to $10.9 billion from $15.9 billion.

Berkowitz’s fund, which was down 21% through last week, has been getting crushed by his bullish bets on financials, which have been getting killed this year thanks to market volatility and the ongoing eurozone debt crisis.

Also, Berkowitz has sold his stakes in Goldman Sachs and Morgan Stanley, while increasing his Bank of America stake and keeping Citigroup, Bloomberg BusinesWeek reported citing an SEC filing.

From Bloomberg BW:

Fairholme held no Goldman Sachs or Morgan Stanley shares as of Aug. 31, according to a Form N-Q filed Oct. 28 with the U.S. Securities and Exchange Commission. The Miami-based mutual fund held 6.26 million Goldman Sachs shares and 34.8 million Morgan Stanley shares with a combined market value of $1.72 billion as of May 31, equaling almost 11 percent of net assets.

According to the report, Berkowitz raised his stake in Bank of America to 81.9 million shares as of August 31, up from 77.3 million as of May 31.  An analyst told Bloomber that BofA is a “high-conviction” position for Berkowitz.

Back in August, Berkowitz hosted a conference call with BofA’s chief executive Brian Moynihan to calm investor concerns about the slide in the bank’s stock.

The Bloomberg report said Berkowitz pared back his Citigroup stake by almost 2%.

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