Bruce Berkowitz Cuts MBIA Stake, Exits Orchard Supply Hardware Position ~ market folly

Tuesday, June 11, 2013

Bruce Berkowitz Cuts MBIA Stake, Exits Orchard Supply Hardware Position

Bruce Berkowitz's firm Fairholme Capital recently filed two 13G's with the SEC.  Here's a breakdown of his latest portfolio activity:

Cuts MBIA Stake Again (MBI)

Fairholme filed a 13G with the SEC on MBIA (MBI), disclosing a second round of share sales.  Two months ago, we highlighted when Fairholme initially sold MBIA shares

Back then, they sold 11 million shares.  Today, we see that they sold even more shares.  Fairholme now shows a 1.2% ownership stake in the company with only 2.25 million shares.  The 13G was filed due to activity on May 31st. 

This means they've reduced their position by almost 93% since the end of the first quarter.  As our premium Hedge Fund Wisdom newsletter pointed out, shares of MBI skyrocketed in May from $10 to $16 on news of a $1.6 billion cash settlement with Bank of America to settle a dispute over faulty mortgage securities.

Shares have since slid down to $13.75, but this has been another big winner for Berkowitz as he started his MBIA position back in 2010.  We also posted up Berkowitz's thesis on MBIA for those interested.

Per Google Finance, MBIA "together with its consolidated subsidiaries, operates the financial guarantee insurance businesses in the industry and is a provider of asset management advisory services. These activities are managed through three business segments: United States public finance insurance, structured finance and international insurance, and advisory services. The Company’s United States public finance insurance business is operated through National Public Finance Guarantee Corporation and its subsidiaries (National), its structured finance and international insurance business is primarily operated through MBIA Insurance Corporation and its subsidiaries."

Exits Orchard Supply Hardware Stores Position (OSH)

Berkowitz also filed a 13G on shares of Orchard Supply Hardware Stores (OSH), revealing that he has sold completely out of the position.  The filing was required due to activity on May 31st. 

This was only a tiny position for Fairholme to begin with.  Berkowitz owns Sears Holdings (SHLD), and Sears spun-off Orchard Supply in December 2011 so that's how he initially got the shares.

Per Google Finance, OSH is "a specialty retailer primarily focused on homeowners with repair, maintenance and improvement needs. The Company operates in one segment and provides a merchandise mix, which consists of various product categories, including repair and maintenance, lawn and garden and in-home products. The Company's repair and maintenance category consists of plumbing, electrical, paint, tools, hardware, and industrial products. Its lawn and garden category consists of nursery, garden, outdoor power and seasonal products."

For more from this great investor, head to Bruce Berkowitz's checklist for investing.

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