Fairholme's Berkowitz Comments on Financials; Most of Fund in Sears (SHLD), MBIA (MBI) Debt

February 1, 2013 3:52 PM EST
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Fairholme Capital Management's Bruce Berkowitz is commenting on banks this afternoon at a conference in New York.

In part, he says financial firms were "priced to die," which created a chance to invest.

Berkowitz also noted that AIG's (NYSE: AIG) crisis was an "illiquidity event." AIG received bailout funds from the U.S. in 2008, which it recently repaid in full.

In play are names like Citi (NYSE: C), BofA (NYSE: BAC), Morgan Stanley (NYSE: MS), and JPMorgan (NYSE: JPM), among others.

Earlier, in a letter to shareholders, Berkowitz said about 55 percent of Fairholme's assets are invested in the debt of Sears Holdings (Nasdaq: SHLD) and MBIA, Inc. (NYSE: MBI). Sears is 17 percent and MBIA is at about 38 percent. The other portion is in cash and T-Bills.

He expects MBIA to settle its suits with BofA, which “should lift MBIA bonds,” he said in the letter.

On Sears, Berkowitz said, "Sears will continue to pay all scheduled interest and principal on its debt obligations," which will create a "barbell strategy."

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