Fairholme Becomes Biggest AIG Investor After U.S. Government
By David Henry and Hugh Son
April 13 (Bloomberg) -- Fairholme Capital Management, the investment firm run by mutual fund manager Bruce Berkowitz, has acquired about 15 million shares of American International Group Inc. in a bet on a rebound of the bailed-out insurer.
The holding, disclosed yesterday in a regulatory filing, ranks Fairholme’s position as second in size only to the U.S. government’s stake of about 80 percent, according to data compiled by Bloomberg. The filing dated Fairholme’s holding as of March 31.
Fairholme began acquiring the securities in the second half of 2009 “as we started to see cash flows of AIG turn positive,” Berkowitz said in a March 15 interview. “It is still a good company with a good global brand.” The stake was more than 13 million shares, Berkowitz said that day.
Berkowitz was named the U.S. domestic stock fund manager of the decade in January by Morningstar Inc., a Chicago-based research firm.
His firm’s 15 million shares are valued at about $620 million based on yesterday’s closing price of $41.22 on the New York Stock Exchange. The stock has gained about 37 percent this year as Chief Executive Officer Robert Benmosche struck deals to sell two non-U.S. life insurance divisions for about $51 billion to help repay the company’s bailout. The insurer was rescued in 2008 with a package that swelled to $182.3 billion.
AIG Debt
Fairholme has also bought “hundreds of millions of dollars of the debt” of AIG, Berkowitz said in the March 15 interview. AIG has “done a reasonable job of walling off the remaining risks” after a government bailout designed to shield the insurer and banks that did business with the company from losses on mortgage-related securities, he said then.
The only AIG investor with a similar-sized stake has been Starr International Co., a company run by former AIG Chief Executive Officer Maurice “Hank” Greenberg. Starr disclosed March 19 that it had agreed to sell as many as 10 million of its 14 million shares of AIG. The next biggest holder, with 6.82 million shares, is fund manager Vanguard Group Inc. of Valley Forge, Pennsylvania, according to data compiled by Bloomberg.
To contact the reporters on this story: David Henry in New York at dhenry19@bloomberg.net; Hugh Son in New York at hson1@bloomberg.net;
www.bloomberg.com/apps/...mp;tkr=AIG%3AAR&sid=az6B4BDdwhcM
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