Shares of MBIA /quotes/comstock/13*!mbi/quotes/nls/mbi (MBI 7.08, +0.65, +10.11%) closed at $6.43 Monday, representing a 62% rise in 2010. In the past three months, the stock has struggled somewhat, and is down about 15% in that time period.
But shares were trading at above $7 Tuesday morning after a regulatory filing showed that Berkowitz had taken an 11% stake in the bond insurer. The filing showed that Berkowitz's investment-management firm, Fairholme Capital Management, holds slightly more than 22 million shares of MBIA.
Berkowitz is best known as the manager of Fairholme Fund /quotes/comstock/10r!fairx (FAIRX 31.49, +0.08, +0.26%) , which has $14.6 billion in assets, according to Morningstar Inc. The fund's performance -- it has five-year and 10-year annualized returns of 7.1% and 12.7%, respectively -- earned him the designation of Morningstar's domestic-stock fund manager of the decade. He was also named domestic-stock fund manager of the year in 2009. Read more about Morningstar's fund managers of the decade.
"His aptitude for picking stocks sets him apart from his peers, and Fairholme's portfolio is filled with attractively priced firms that generate high free cash flow," wrote Morningstar earlier this year.
Berkowitz made headlines in May when it was revealed he'd bought 15 million common shares and 20 million preferred shares of American International Group Inc. /quotes/comstock/13*!aig/quotes/nls/aig (AIG 37.21, +1.64, +4.61%) . At the time, the investment was worth more than $700 million. Read about Berkowitz's first-quarter investments.
Monday's filings also showed that Berkowitz has upped his AIG stake to 24.3% of the outstanding stock from 18.9% as revealed in May. AIG's stock was up more than 2% in light trading before Tuesday's opening bell.
MBIA was one of the hardest-hit firms during the financial crisis, due to its role in selling derivative-based guarantees on mortgage-backed securities and collateralized debt obligations. As house prices fell, MBIA and fellow bond insurer Ambac Financial /quotes/comstock/13*!abk/quotes/nls/abk (ABK 0.70, +0.05, +7.73%) were forced to make good on those guarantees.
At the height of the credit boom in late 2006 and early 2007, MBIA shares frequently traded above $70. The shares hit a low on March 5, 2009, closing at $2.29, according to FactSet Research.
Bloomberg reported that Fairholme's stake in MBIA makes it the second-largest holder of the company, behind private-equity firm Warburg Pincus.
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