Form NPORT-P FAIRHOLME FUNDS INC For: Aug 31

October 29, 2020 11:19 AM EDT

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    NPORT-P
    false
    
      
      
        
          0001096344
          XXXXXXXX
        
      
      
      
      
        S000008484
        C000023273
      
      
    
  
  
    
      Fairholme Funds, Inc.
      811-09607
      0001096344
      549300HWYY7ECL9DW492
      2601 NE 2ND AVENUE
      Miami
      
      33137
      1-866-202-2263
      The Fairholme Fund
      S000008484
      549300OIJNQWMW22MR11
      2020-11-30
      2020-08-31
      N
    
    
      1058755322.16
      1739034.41
      1057016287.75
      0.00000000
      0.00000000
      0.00000000
      0.00000000
      0.00000000
      0.00000000
      0.00000000
      0.00000000
      0.00000000
      0.00000000
      0.00000000
      0.00000000
      0.00000000
      0.00000000
      N
      
        
          
        
        
          
            
            
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
          
          
            
            
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
          
          
            
            
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
          
          
            
            
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
          
          
            
            
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
          
          
            
            
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
            
              
              
              
            
          
        
        
        
        
      
      
      
      
      
      
    
    
      
        TREASURY BILL
        254900HROIFWPRGM1V77
        United States Treasury Bill
        912796TY5
        
          
          
        
        13000000.00000000
        PA
        USD
        12995193.64000000
        1.229422270082
        Long
        DBT
        UST
        US
        N
        
        2
        
          2020-12-31
          None
          0.00000000
          N
          N
          N
        
        
          N
          N
          N
        
      
      
        Imperial Metals Corp
        549300WQSPLDYCC4Z755
        Imperial Metals Corp
        452892102
        
          
          
          
        
        6865767.00000000
        NS
        
        17422999.02000000
        1.648318878518
        Long
        EC
        CORP
        CA
        N
        
        1
        
          N
          N
          N
        
      
      
        TREASURY BILL
        254900HROIFWPRGM1V77
        United States Treasury Bill
        912796TJ8
        
          
          
        
        13000000.00000000
        PA
        USD
        12999748.06000000
        1.229853145183
        Long
        DBT
        UST
        US
        N
        
        2
        
          2020-09-10
          None
          0.00000000
          N
          N
          N
        
        
          N
          N
          N
        
      
      
        TREASURY BILL
        254900HROIFWPRGM1V77
        United States Treasury Bill
        9127962Y4
        
          
        
        50000000.00000000
        PA
        USD
        49961031.00000000
        4.726609379534
        Long
        DBT
        UST
        US
        N
        
        2
        
          2021-05-20
          None
          0.00000000
          N
          N
          N
        
        
          N
          N
          N
        
      
      
        Berkshire Hathaway Inc
        5493000C01ZX7D35SD85
        Berkshire Hathaway Inc
        084670702
        
          
          
        
        245100.00000000
        NS
        USD
        53441604.00000000
        5.055892195734
        Long
        EC
        CORP
        US
        N
        
        1
        
          N
          N
          N
        
      
      
        St Joe Co/The
        529900XVHOT3BF8PWG49
        St Joe Co/The
        790148100
        
          
          
        
        22208024.00000000
        NS
        USD
        515448237.04000000
        48.76445547846
        Long
        EC
        CORP
        US
        N
        
        1
        
          N
          N
          N
        
      
      
        TREASURY BILL
        254900HROIFWPRGM1V77
        United States Treasury Bill
        912796XE4
        
          
          
        
        49000000.00000000
        PA
        USD
        48971692.21000000
        4.633012071577
        Long
        DBT
        UST
        US
        N
        
        2
        
          2021-02-25
          None
          0.00000000
          N
          N
          N
        
        
          N
          N
          N
        
      
      
        FANNIE MAE
        B1V7KEBTPIMZEU4LTD58
        FEDERAL NATIONAL MORTGAGE ASSOCIATION
        313586752
        
          
          
        
        8784077.00000000
        NS
        USD
        81428393.79000000
        7.703608235151
        Long
        EP
        USGSE
        US
        N
        
        1
        
          N
          N
          N
        
      
      
        SEARS HOLDINGS CORP
        549300KWWR4P1RYUVG65
        Sears Holdings Corp
        812350AF3
        
          
          
        
        97022000.00000000
        PA
        USD
        1300094.80000000
        0.122996666661
        Long
        DBT
        CORP
        US
        N
        
        2
        
          2019-12-15
          Fixed
          8.00000000
          Y
          N
          N
        
        
          N
          N
          N
        
      
      
        TREASURY BILL
        254900HROIFWPRGM1V77
        United States Treasury Bill
        912796UC1
        
          
          
        
        13000000.00000000
        PA
        USD
        12994283.12000000
        1.229336129499
        Long
        DBT
        UST
        US
        N
        
        2
        
          2021-01-28
          None
          0.00000000
          N
          N
          N
        
        
          N
          N
          N
        
      
      
        Fidelity Treasury Portfolio
        N/A
        Fidelity Treasury Portfolio
        316175504
        
          
          
        
        168068805.31000000
        NS
        USD
        168068805.31000000
        15.90030421080
        Long
        STIV
        RF
        US
        N
        
        1
        
          N
          N
          N
        
      
      
        FREDDIE MAC
        S6XOOCT0IEG5ABCC6L87
        FEDERAL HOME LOAN MORTGAGE CORP
        313400624
        
          
          
        
        8955013.00000000
        NS
        USD
        83192070.77000000
        7.870462521167
        Long
        EP
        USGSE
        US
        N
        
        1
        
          N
          N
          N
        
      
    
    
      
    
    
      2020-10-23
      Fairholme Funds, Inc.
      Wayne Kellner
      Wayne Kellner
      Treasurer
    
  
  XXXX



SCHEDULE
OF
INVESTMENTS
August
31,
2020
(unaudited)
The
Fairholme
Fund
1
The
accompanying
notes
are
an
integral
part
of
the
schedule
of
investments.
Shares
Value
DOMESTIC
EQUITY
SECURITIES
53
.9
%
DIVERSIFIED
HOLDING
COMPANIES
 — 
5
.1
%
245,100‌
Berkshire
Hathaway,
Inc.,
Class
B
(a)
$
53,441,604‌
REAL
ESTATE
MANAGEMENT
&
DEVELOPMENT
 — 
48
.8
%
22,208,024‌
The
St.
Joe
Co.
(a)(b)
515,448,237‌
TOTAL
DOMESTIC
EQUITY
SECURITIES
(COST $645,201,732)
568,889,841‌
FOREIGN
EQUITY
SECURITIES
1
.6
%
CANADA
1
.6
%
METALS
&
MINING
 — 
1
.6
%
6,865,767‌
Imperial
Metals
Corp.
(a)(b)
17,422,999‌
TOTAL
FOREIGN
EQUITY
SECURITIES
(COST $64,630,492)
17,422,999‌
DOMESTIC
PREFERRED
EQUITY
SECURITIES
15
.6
%
MORTGAGE
FINANCE
 — 
15
.6
%
8,955,013‌
Federal
Home
Loan
Mortgage
Corp.
7.875%,
Series
Z
(a)(c)
83,192,071‌
8,784,077‌
Federal
National
Mortgage
Association
7.750%,
Series
S
(a)(c)
81,428,394‌
164,620,465‌
TOTAL
DOMESTIC
PREFERRED
EQUITY
SECURITIES
(COST $75,287,318)
164,620,465‌
Principal
Value
DOMESTIC
CORPORATE
BONDS
0
.1
%
RETAIL
DEPARTMENT
STORES
 — 
0
.1
%
$
97,022,000‌
Sears
Holdings
Corp.
8.000%,
12/15/2019
(d)
$
1,300,095‌
TOTAL
DOMESTIC
CORPORATE
BONDS
(COST $97,385,904)
1,300,095‌
U.S.
GOVERNMENT
OBLIGATIONS
13
.1
%
U.S.
Treasury
Bills
13,000,000‌
0.010%,
09/10/2020
(e)
12,999,748‌
13,000,000‌
0.060%,
12/31/2020
(e)
12,995,194‌
13,000,000‌
0.085%,
01/28/2021
(e)
12,994,283‌
49,000,000‌
0.072%,
02/25/2021
(e)
48,971,692‌
50,000,000‌
0.170%,
05/20/2021
(e)
49,961,031‌
TOTAL
U.S.
GOVERNMENT
OBLIGATIONS
(COST $137,913,738)
137,921,948‌
Shares
MONEY
MARKET
FUNDS
15
.9
%
167,487,560
Fidelity
Investments
Money
Market
Treasury
Portfolio
-
Class
I,
0.01%
(f)
167,487,560‌
TOTAL
MONEY
MARKET
FUNDS
(COST $167,487,560)
167,487,560‌
TOTAL
INVESTMENTS
100.2%
(COST $1,187,906,744)
1,057,642,908‌
LIABILITIES
IN
EXCESS
OF
OTHER
ASSETS
(0.2)%
(
2,077,378‌
)
NET
ASSETS
100.0%
$
1,055,565,530‌
(a)
    Non-income
producing
security.
(b)
    Affiliated
Company.
See
Note
2.
(c)
    Variable
rate
security.
Rates
shown
are
the
effective
rates
as
of
August
31,
2020.
(d)
    Security
in
default
and
no
interest
was
accrued
as
of
August
31,
2020.
(e)
    Rates
shown
are
the
effective
yields
based
on
the
purchase
price.
The
calculation
assumes
the
security
is
held
to
maturity.
(f)
    Annualized
based
on
the
1-day
yield
as
of
August
31,
2020.
SCHEDULE
OF
INVESTMENTS
August
31,
2020
(unaudited)
The
Fairholme
Focused
Income
Fund
2
The
accompanying
notes
are
an
integral
part
of
the
schedule
of
investments.
Shares
Value
DOMESTIC
EQUITY
SECURITIES
18
.3
%
DIVERSIFIED
BANKS
 — 
3
.1
%
135,600‌
Bank
of
America
Corp.
$
3,490,344‌
DIVERSIFIED
TELECOMMUNICATION
 — 
3
.0
%
115,600‌
AT&T,
Inc.
3,446,036‌
FOOD
PRODUCTS
 — 
3
.6
%
114,800‌
The
Kraft
Heinz
Co.
4,022,592‌
OIL
&
GAS
STORAGE
&
TRANSPORTATION
 — 
5
.5
%
160,000‌
Kinder
Morgan,
Inc.
2,211,200‌
175,000‌
Energy
Transfer
LP
1,123,500‌
322,100‌
Western
Midstream
Partners
LP
2,921,447‌
6,256,147‌
REAL
ESTATE
INVESTMENT
TRUSTS
 — 
3
.1
%
52,200‌
Simon
Property
Group,
Inc.
3,541,770‌
TOTAL
DOMESTIC
EQUITY
SECURITIES
(COST $21,711,976)
20,756,889‌
FOREIGN
EQUITY
SECURITIES
0
.8
%
CANADA
0
.8
%
OIL
&
NATURAL
GAS
EXPLORATION
 — 
0
.8
%
44,800‌
Canadian
Natural
Resources
Ltd.
881,216‌
TOTAL
FOREIGN
EQUITY
SECURITIES
(COST $907,827)
881,216‌
DOMESTIC
PREFERRED
EQUITY
SECURITIES
8
.0
%
MORTGAGE
FINANCE
 — 
8
.0
%
Federal
Home
Loan
Mortgage
Corp.
302,300‌
5.100%
,
Series
H
(a)
4,232,200‌
260,924‌
6.550%
,
Series
Y
(a)
2,022,161‌
88,500‌
7.875%
,
Series
Z
(a)(b)
822,165‌
Shares
Value
DOMESTIC
PREFERRED
EQUITY
SECURITIES—
8.0%
(CONTINUED)
MORTGAGE
FINANCE
(continued)
210,100‌
Federal
National
Mortgage
Association
7.750%,
Series
S
(a)(b)
$
1,947,627‌
9,024,153‌
OIL
&
NATURAL
GAS
EXPLORATION
 — 
0
.0
%
Chesapeake
Energy
Corp.
42,416‌
5.000%
25,874‌
6,083‌
5.750%
3,954‌
3,350‌
5.750%
2,780‌
600‌
5.750%
(c)
198‌
100‌
5.750%
(c)
83‌
32,889‌
TOTAL
DOMESTIC
PREFERRED
EQUITY
SECURITIES
(COST $15,292,840)
9,057,042‌
WARRANTS
0
.0
%
INTEGRATED
OIL
&
GAS
 — 
0
.0
%
7,685‌
Occidental
Petroleum
Corp.,
Vested
Strike
Price
$22.00,
Expire 08/03/2027
(a)(d)
22,671‌
TOTAL
WARRANTS
(COST $38,041)
22,671‌
Principal
DOMESTIC
CORPORATE
BONDS
1
.9
%
DIVERSIFIED
BANKS
 — 
1
.7
%
$
2,000,000‌
JPMorgan
Chase
&
Co.
4.051%,
Series
Z
(e)
1,994,000‌
RETAIL
DEPARTMENT
STORES
 — 
0
.2
%
17,595,500‌
Sears
Holdings
Corp.
8.000%,
12/15/2019
(f)
235,780‌
TOTAL
DOMESTIC
CORPORATE
BONDS
(COST $18,624,227)
2,229,780‌
SCHEDULE
OF
INVESTMENTS
(continued)
August
31,
2020
(unaudited)
The
Fairholme
Focused
Income
Fund
3
The
accompanying
notes
are
an
integral
part
of
the
schedule
of
investments.
Principal
Value
U.S.
GOVERNMENT
OBLIGATIONS
65
.1
%
U.S.
Treasury
Bills
$
4,000,000‌
0.010%,
09/10/2020
(g)
$
3,999,922‌
4,000,000‌
0.060%,
12/31/2020
(g)
3,998,521‌
4,000,000‌
0.085%,
01/28/2021
(g)
3,998,241‌
26,000,000‌
0.075%,
02/25/2021
(g)
25,984,980‌
27,000,000‌
0.116%,
03/25/2021
(g)
26,981,934‌
9,000,000‌
0.170%,
05/20/2021
(g)
8,992,986‌
TOTAL
U.S.
GOVERNMENT
OBLIGATIONS
(COST $73,959,184)
73,956,584‌
Shares
MONEY
MARKET
FUNDS
5
.9
%
6,736,866
Fidelity
Investments
Money
Market
Treasury
Portfolio
-
Class
I,
0.01%
(h)
6,736,866‌
TOTAL
MONEY
MARKET
FUNDS
(COST $6,736,866)
6,736,866‌
TOTAL
INVESTMENTS
100.0%
(COST $137,270,961)
113,641,048‌
LIABILITIES
IN
EXCESS
OF
OTHER
ASSETS
0.0%
(
33,739‌
)
NET
ASSETS
100.0%
$
113,607,309‌
(a)
    Non-income
producing
security.
(b)
    Variable
rate
security.
Rates
shown
are
the
effective
rates
as
of
August
31,
2020.
(c)
    Restricted
security
as
set
forth
in
Rule
144A
under
the
Securities
Act
of
1933.
The
value
of
these
investments
totals
$281,
which
represents
0.00%
of
The
Income
Fund’s
net
assets.
(d)
    Warrants
have
terms
and
conditions
based
on
dividends
paid
and
other
events
that
may
lower
the
strike
price
and
raise
the
shares
per
warrant
conversion
ratio.
Reported
strike
prices
and
conversion
ratios
are
as
of
the
date
of
this
report.
All
share-to-warrant
conversion
ratios
are
currently
1:1.
(e)
    Security
is
perpetual
in
nature
and
has
no
stated
maturity
date.
(f)
    Security
in
default
and
no
interest
was
accrued
as
of
August
31,
2020.
(g)
    Rates
shown
are
the
effective
yields
based
on
the
purchase
price.
The
calculation
assumes
the
security
is
held
to
maturity.
(h)
    Annualized
based
on
the
1-day
yield
as
of
August
31,
2020.
SCHEDULE
OF
INVESTMENTS
August
31,
2020
(unaudited)
The
Fairholme
Allocation
Fund
4
The
accompanying
notes
are
an
integral
part
of
the
schedule
of
investments.
Shares
Value
DOMESTIC
EQUITY
SECURITIES
28
.6
%
DIVERSIFIED
BANKS
 — 
3
.0
%
61,200‌
Bank
of
America
Corp.
$
1,575,288‌
DIVERSIFIED
HOLDING
COMPANIES
 — 
4
.9
%
11,900‌
Berkshire
Hathaway,
Inc.,
Class
B
(a)
2,594,676‌
FOOD
PRODUCTS
 — 
2
.9
%
44,800‌
The
Kraft
Heinz
Co.
1,569,792‌
OIL
&
GAS
STORAGE
&
TRANSPORTATION
 — 
3
.0
%
36,600‌
Kinder
Morgan,
Inc.
505,812‌
117,900‌
Western
Midstream
Partners
LP
1,069,353‌
1,575,165‌
REAL
ESTATE
MANAGEMENT
&
DEVELOPMENT
 — 
14
.8
%
348,267‌
The
St.
Joe
Co.
(a)(b)
7,829,042‌
TOTAL
DOMESTIC
EQUITY
SECURITIES
(COST $13,617,485)
15,143,963‌
FOREIGN
EQUITY
SECURITIES
11
.4
%
CANADA
11
.4
%
METALS
&
MINING
 — 
10
.5
%
2,192,841‌
Imperial
Metals
Corp.
(a)
5,564,690‌
OIL
&
NATURAL
GAS
EXPLORATION
 — 
0
.9
%
23,700‌
Canadian
Natural
Resources
Ltd.
466,179‌
TOTAL
FOREIGN
EQUITY
SECURITIES
(COST $26,438,796)
6,030,869‌
Shares
Value
DOMESTIC
PREFERRED
EQUITY
SECURITIES
15
.4
%
MORTGAGE
FINANCE
 — 
15
.4
%
444,095‌
Federal
Home
Loan
Mortgage
Corp.
7.875%,
Series
Z
(a)(c)
$
4,125,643‌
432,465‌
Federal
National
Mortgage
Association
7.750%,
Series
S
(a)(c)
4,008,950‌
8,134,593‌
OIL
&
NATURAL
GAS
EXPLORATION
 — 
0
.0
%
4,779‌
Chesapeake
Energy
Corp.
5.750%
3,107‌
TOTAL
DOMESTIC
PREFERRED
EQUITY
SECURITIES
(COST $6,422,016)
8,137,700‌
WARRANTS
0
.0
%
INTEGRATED
OIL
&
GAS
 — 
0
.0
%
4,100‌
Occidental
Petroleum
Corp.,
Vested
Strike
Price
$22.00,
Expire 08/03/2027
(a)(d)
12,095‌
TOTAL
WARRANTS
(COST $20,295)
12,095‌
Principal
U.S.
GOVERNMENT
OBLIGATIONS
18
.9
%
U.S.
Treasury
Bills
$
1,000,000‌
0.010%,
09/10/2020
(e)
999,981‌
1,000,000‌
0.060%,
12/31/2020
(e)
999,630‌
1,000,000‌
0.085%,
01/28/2021
(e)
999,560‌
4,000,000‌
0.071%,
02/25/2021
(e)
3,997,689‌
3,000,000‌
0.170%,
05/20/2021
(e)
2,997,662‌
TOTAL
U.S.
GOVERNMENT
OBLIGATIONS
(COST $9,994,355)
9,994,522‌
SCHEDULE
OF
INVESTMENTS
(continued)
August
31,
2020
(unaudited)
The
Fairholme
Allocation
Fund
5
The
accompanying
notes
are
an
integral
part
of
the
schedule
of
investments.
(a)
    Non-income
producing
security.
(b)
    Restricted/controlled
security.
The
value
of
this
security
totals
$7,829,042,
which
represents
14.79%
of
The
Allocation
Fund’s
net
assets.
Information
related
to
this
security
is
as
follows:
(c)
    Variable
rate
security.
Rates
shown
are
the
effective
rates
as
of
August
31,
2020.
(d)
    Warrants
have
terms
and
conditions
based
on
dividends
paid
and
other
events
that
may
lower
the
strike
price
and
raise
the
shares
per
warrant
conversion
ratio.
Reported
strike
prices
and
conversion
ratios
are
as
of
the
date
of
this
report.
All
share-to-warrant
conversion
ratios
are
currently
1:1.
(e)
    Rates
shown
are
the
effective
yields
based
on
the
purchase
price.
The
calculation
assumes
the
security
is
held
to
maturity.
(f)
    Annualized
based
on
the
1-day
yield
as
of
August
31,
2020.
Shares
Value
MONEY
MARKET
FUNDS
25
.7
%
13,616,076
Fidelity
Investments
Money
Market
Treasury
Portfolio
-
Class
I,
0.01%
(f)
$
13,616,076‌
TOTAL
MONEY
MARKET
FUNDS
(COST $13,616,076)
13,616,076‌
TOTAL
INVESTMENTS
100.0%
(COST $70,109,023)
52,935,225‌
LIABILITIES
IN
EXCESS
OF
OTHER
ASSETS
0.0%
(
8,693‌
)
NET
ASSETS
100.0%
$
52,926,532‌
Shares
Issuer
Acquisition
Date(s)
Acquisition
Cost
8/31/2020
Carrying
Value
Per
Unit
348,267
The
St.
Joe
Co.
08/09/2017-09/01/2017
$6,615,792
$22.48
NOTES
TO
SCHEDULE
OF
INVESTMENTS
August
31,
2020
(unaudited)
Fairholme
Funds,
Inc.
6
Significant
Accounting
Policies
As
investment
companies,
the
Funds
follow
the
investment
company
accounting
and
reporting
guidance,
which
is
part
of
U.S.
generally
accepted
accounting
principles
(“U.S.
GAAP”).
The
Funds’
investments
are
reported
at
fair
value
as
defined
by
U.S.
GAAP.
The
Funds
calculate
their
net
asset
values
as
soon
as
practicable
following
the
close
of
regular
trading
on
the
New
York
Stock
Exchange
(currently
4:00
p.m.
Eastern
Time)
on
each
day
the
New
York
Stock
Exchange
is
open.
A
description
of
the
valuation
techniques
applied
to
the
Funds’
securities
measured
at
fair
value
on
a
recurring
basis
follows:
Security
Valuation:
Equity
securities
(common
and
preferred
stocks):
Securities
traded
on
a
national
securities
exchange
or
reported
on
the
NASDAQ
national
market
are
generally
valued
at
the
official
closing
price,
or
at
the
last
reported
sale
price
on
the
exchange
or
market
on
which
the
securities
are
traded,
as
of
the
close
of
business
on
the
day
the
securities
are
being
valued
or,
lacking
any
sales,
at
the
last
available
bid
price.
To
the
extent
these
securities
are
actively
traded
and
valuation
adjustments
are
not
applied,
they
are
classified
in
Level
1
of
the
fair
value
hierarchy.
If
these
securities
are
not
actively
traded,
they
are
classified
in
Level
2.
Subject
to
the
oversight
of
the
Board,
the
Manager
may
determine
the
fair
valuation
of
a
security
when
market
quotations
are
insufficient
or
not
readily
available,
when
securities
are
determined
to
be
illiquid
or
restricted,
or
when
in
the
judgment
of
the
Manager
the
prices
or
values
available
do
not
represent
the
fair
value
of
the
instrument.
In
these
situations,
if
the
inputs
are
observable,
the
valuation
will
be
classified
in
Level
2
of
the
fair
value
hierarchy,
otherwise
they
would
be
classified
in
Level
3.
Fixed-income
securities
(U.S.
government
obligations,
corporate
bonds,
convertible
bonds,
and
asset
backed
securities):
The
fair
value
of
fixed-income
securities
is
determined
using
market
quotations
when
readily
available,
but
may
also
be
estimated
by
various
methods
when
no
such
market
quotations
exist
and
when
the
Manager
believes
these
other
methods
reflect
the
fair
value
of
such
securities.
These
methods
may
consider
recently
executed
transactions
in
securities
of
the
issuer
or
comparable
issuers
and
market
price
valuations
from
independent
pricing
services
and/or
brokers
(where
observable).
Where
the
Manager
deems
it
appropriate
to
do
so
(such
as
when
independent
prices
are
unavailable
or
not
deemed
to
be
representative
of
fair
value)
fixed
income
securities
will
be
fair
valued
in
good
faith
following
consideration
by,
and
conclusion
of,
the
Manager’s
Valuation
and
Liquidity
Risk
Management
Committee.
As
of
August
31,
2020,
fixed-income
securities
are
valued
by
the
Manager
utilizing
observable
market
prices
on
the
day
of
valuation
or
the
average
bid
of
independent
broker/dealer
quotes
and/or
the
average
of
valuations
from
independent
pricing
services.
Although
fixed-income
securities
are
classified
in
Level
2
of
the
fair
value
hierarchy
at
August
31,
2020,
in
instances
where
significant
unobservable
inputs
are
used,
they
would
be
classified
in
Level
3.
Open-end
mutual
funds:
Investments
in
open-end
mutual
funds
including
money
market
funds
are
valued
at
their
closing
net
asset
value
each
business
day
and
are
classified
in
Level
1
of
the
fair
value
hierarchy.
Short-term
securities:
Investments
in
securities
with
maturities
of
less
than
sixty
days
when
acquired,
or
which
subsequently
are
within
sixty
days
of
maturity,
shall
be
valued
at
prices
supplied
by
an
independent
pricing
source
or
by
one
of
the
Funds’
pricing
agents
based
on
broker
or
dealer
supplied
valuations
or
matrix
pricing.
To
the
extent
the
inputs
are
observable
and
timely,
the
values
would
be
classified
in
Level
2
of
the
fair
value
hierarchy.
Restricted
securities:
The
Manager
is
deemed
to
be
an
affiliate
of
The
St.
Joe
Co.
(“Joe”)
for
purposes
of
the
Securities
Act
of
1933
and
Rule
144.
This
determination
was
made
based
on
a
number
of
factors,
including
the
collective
ownership
of
Joe
by
certain
of
the
Funds
and
other
advisory
clients
advised
by
the
Manager.
Shares
of
Joe
owned
by
The
Allocation
Fund
are
considered
control
securities
under
Rule
144
and
are
treated
as
restricted
securities
for
purposes
of
The
Allocation
Fund’s
valuation
procedures.
Due
to
the
restrictions
on
resale,
the
securities
are
generally
valued
at
a
discount
to
similar
publicly
traded
securities.
Depending
on
the
relative
significance
of
valuation
inputs,
these
instruments
may
be
classified
in
either
Level
2
or
Level
3
of
the
fair
value
hierarchy.
Joe
was
classified
as
Level
2
at
August
31,
2020.
Warrants:
The
Funds
may
invest
in
warrants,
which
may
be
acquired
either
through
a
direct
purchase,
included
as
part
of
a
private
placement,
or
pursuant
to
corporate
actions.
Warrants
entitle,
but
do
not
obligate,
the
holder
to
buy
equity
securities
at
a
specific
price
for
a
specific
period
of
time.
Warrants
may
be
considered
more
speculative
than
certain
other
types
of
investments
in
that
they
do
not
entitle
a
holder
to
dividends
or
voting
rights
with
respect
to
the
underlying
securities
that
may
be
purchased
NOTES
TO
SCHEDULE
OF
INVESTMENTS
(continued)
August
31,
2020
(unaudited)
Fairholme
Funds,
Inc.
7
nor
do
they
represent
any
rights
in
the
assets
of
the
issuing
company.
Also,
the
value
of
a
warrant
does
not
necessarily
change
with
the
value
of
the
underlying
securities
and
a
warrant
ceases
to
have
value
if
it
is
not
exercised
prior
to
its
expiration
date.
Warrants
traded
on
a
security
exchange
are
valued
at
the
official
closing
price
on
the
valuation
date
and
are
classified
as
Level
1
of
the
fair
value
hierarchy.
Over
the
counter
(OTC)
warrants
are
valued
using
simulation
models
utilizing
market
value
of
the
underlying
security,
expiration
date
of
the
warrants,
volatility
of
the
underlying
security,
strike
price
of
the
warrants,
risk-
free
interest
rate
at
the
valuation
date,
and
are
classified
as
Level
2
or
Level
3
of
the
fair
value
hierarchy
depending
on
the
observability
of
the
inputs
used.
The
Funds
use
several
recognized
industry
third-party
pricing
services
(TPPS)
-approved
by
the
Board
and
unaffiliated
with
the
Manager
-to
provide
prices
for
some
of
the
Funds’
securities.
The
Funds
also
use
other
independent
market
trade
data
sources
(such
as
TRACE,
the
FINRA
developed
mandatory
reporting
of
over-the-counter
secondary
market
transactions),
as
well
as
broker
quotes
provided
by
market
makers.
The
data
within
these
feeds
is
ultimately
sourced
from
major
stock
exchanges
and
trading
systems
where
these
securities
trade.
If
a
price
obtained
from
the
pricing
source
is
deemed
unreliable,
it
may
be
discarded
and/or
challenged.
In
these
cases
the
pricing
decision
is
made
by
reference
to
the
reliable
market
data
from
the
other
market
data
sources.
Subject
to
the
oversight
of
the
Board,
the
Manager
may
determine
the
fair
valuation
of
a
security
when
market
quotations
are
insufficient
or
not
readily
available,
when
securities
are
determined
to
be
illiquid
or
restricted,
or
when
in
the
judgment
of
the
Manager
the
prices
or
values
available
do
not
represent
the
fair
value
of
the
instrument.
Factors
which
may
cause
the
Manager
to
make
such
a
judgment
include
the
following:
(a)
only
a
bid
price
or
an
asked
price
is
available;
(b)
the
spread
between
bid
and
asked
prices
is
substantial;
(c)
the
liquidity
of
the
securities;
(d)
the
frequency
of
sales;
(e)
the
thinness
of
the
market;
(f)
the
size
of
reported
trades;
(g)
actions
of
the
securities
markets,
such
as
the
suspension
or
limitation
of
trading;
and
(h)
local
market
closures.
Among
the
factors
to
be
considered
to
fair
value
a
security
are
recent
prices
of
comparable
securities
that
are
publicly
traded,
reliable
prices
of
securities
not
publicly
traded,
the
use
of
valuation
models,
current
analyst
reports,
valuing
the
income
or
cash
flow
of
the
issuer,
or
cost
if
the
preceding
factors
do
not
apply.
The
circumstances
of
fair
valued
securities
are
frequently
monitored
to
determine
if
fair
valuation
measures
continue
to
apply.
The
Manager
reports
quarterly
to
the
Board
the
results
of
the
application
of
fair
valuation
policies
and
procedures.
The
inputs
and
valuation
techniques
used
to
measure
fair
value
of
the
Funds’
investments
are
summarized
into
three
levels
as
described
in
the
hierarchy
below:
Level
1
quoted
prices
in
active
markets
for
identical
securities;
Level
2
other
significant
observable
inputs
(including
quoted
prices
for
similar
securities,
quoted
prices
in
inactive
markets
for
identical
securities,
interest
rates,
prepayment
speeds,
credit
risk,
etc.);
and
Level
3
significant
unobservable
inputs
(including
the
Manager’s
determination
as
to
the
fair
value
of
investments).
NOTES
TO
SCHEDULE
OF
INVESTMENTS
(continued)
August
31,
2020
(unaudited)
Fairholme
Funds,
Inc.
8
The
inputs
or
methodology
used
for
valuing
investments
are
not
necessarily
an
indication
of
the
level
of
risk
associated
with
investing
in
those
investments.
The
summary
of
the
Funds’
investments
by
inputs
used
to
value
the
Funds’
investments
as
of
August
31,
2020
is
as
follows:
Valuation
Inputs
Level
1
-
Quoted
Prices
Level
2
-
Other
Significant
Observable
Inputs
Level
3
-
Significant
Observable
Inputs
Total
Fair
Value
at
08/31/20
THE
FAIRHOLME
FUND
ASSETS:
INVESTMENTS
(Fair
Value):
Domestic
Equity
Securities
*
$
568,889,841
$
$
$
568,889,841
Foreign
Equity
Securities
*
17,422,999
17,422,999
Domestic
Preferred
Equity
Securities
*
164,620,465
164,620,465
Domestic
Corporate
Bonds
*
1,300,095
1,300,095
U.S.
Government
Obligations
137,921,948
137,921,948
Money
Market
Funds
167,487,560
167,487,560
TOTAL
INVESTMENTS
$
918,420,865
$
139,222,043
$
$
1,057,642,908
*
Industry
classification
for
these
categories
are
detailed
in
the
Schedule
of
Investments.
Valuation
Inputs
Level
1
-
Quoted
Prices
Level
2
-
Other
Significant
Observable
Inputs
Level
3
-
Significant
Observable
Inputs
Total
Fair
Value
at
08/31/20
THE
INCOME
FUND
ASSETS:
INVESTMENTS
(Fair
Value):
Domestic
Equity
Securities
*
$
20,756,889
$
$
$
20,756,889
Foreign
Equity
Securities
*
881,216
881,216
Domestic
Preferred
Equity
Securities
Mortgage
Finance
9,024,153
9,024,153
Oil
&
Natural
Gas
Exploration
25,874
7,015
32,889
Warrants
*
22,671
22,671
Domestic
Corporate
Bonds
*
2,229,780
2,229,780
U.S.
Government
Obligations
73,956,584
73,956,584
Money
Market
Funds
6,736,866
6,736,866
TOTAL
INVESTMENTS
$
37,447,669
$
76,193,379
$
$
113,641,048
*
Industry
classification
for
these
categories
are
detailed
in
the
Schedule
of
Investments.
NOTES
TO
SCHEDULE
OF
INVESTMENTS
(continued)
August
31,
2020
(unaudited)
Fairholme
Funds,
Inc.
9
There
were
no
Level
3
investments
for
any
of
the
Funds
at
August
31,
2020.
Transactions
in
Shares
of
Affiliates
Portfolio
companies
in
which
The
Fairholme
Fund
owns
5%
or
more
of
the
outstanding
voting
securities
of
the
issuer
are
considered
affiliates
of
The
Fairholme
Fund.
The
aggregate
fair
value
of
all
securities
of
affiliates
held
by
The
Fairholme
Fund
as
of
August
31,
2020
amounted
to
$532,871,236,
representing
approximately
50.48%
of
The
Fairholme
Fund’s
net
assets.
Transactions
in
The
Fairholme
Fund
during
the
period
ended
31
August,
2020,
in
which
the
issuer
of
the
security
was
an
affiliate
are
as
follows:
For
additional
information
regarding
the
accounting
policies
of
the
Funds
and
the
most
recent
federal
income
tax
information,
refer
to
the
most
recent
financial
statements
in
the
N-CSR
filing
at
www.sec.gov.
Valuation
Inputs
Level
1
-
Quoted
Prices
Level
2
-
Other
Significant
Observable
Inputs
Level
3
-
Significant
Observable
Inputs
Total
Fair
Value
at
08/31/20
THE
ALLOCATION
FUND
ASSETS:
INVESTMENTS
(Fair
Value):
Domestic
Equity
Securities
Real
Estate
Management
&
Development
$
$
7,829,042
$
$
7,829,042
Other
Industries
*
7,314,921
7,314,921
Foreign
Equity
Securities
*
6,030,869
6,030,869
Domestic
Preferred
Equity
Securities
Mortgage
Finance
8,134,593
8,134,593
Oil
&
Natural
Gas
Exploration
3,107
3,107
Warrants
*
12,095
12,095
U.S.
Government
Obligations
9,994,522
9,994,522
Money
Market
Funds
13,616,076
13,616,076
TOTAL
INVESTMENTS
$
35,108,554
$
17,826,671
$
$
52,935,225
*
Industry
classification
for
these
categories
are
detailed
in
the
Schedule
of
Investments.
November
30,
2019
Gross
Addition
Gross
Deduction
August
31,
2020
Shares/
Par
Value
Shares/
Par
Value
Shares/
Par
Value
Shares/
Par
Value
Fair
Value
Change
In
Unrealized
Appreciation
Imperial
Metals
Corp.
6,865,767
6,865,767
$
17,422,999
$
8,635,974
The
St.
Joe
Co.
22,208,024
22,208,024
515,448,237
93,495,780
Total
$
532,871,236
$
102,131,754


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