MIAMI--(BUSINESS WIRE)--The Fairholme Partnership, L.P. (the “Partnership”) today announced a net return of 8.3% for the first quarter of 2015.1 Since inception on January 1, 2013, and through March 31, 2015, the Partnership’s net return was 44.2% versus a 51.9% gain and a 15.1% gain for the S&P 5002 and the HFRI Fund Weighted Composite Index,3 respectively. The Partnership was launched with seed capital from employees of its investment manager, Fairholme Capital Management (“Fairholme”), and had approximately $441 million in assets as of March 31, 2015.
The Partnership is advised by Fairholme and its Chief Investment Officer, Bruce R. Berkowitz. The Partnership seeks long-term growth of capital by investing in a focused portfolio of equity and fixed-income securities acquired at prices well below Fairholme’s estimate of intrinsic value. Such securities may include preferred and common stock, bank debt, convertible securities and bonds, warrants, and interests in real estate investment trusts. The Partnership’s portfolio shifts across asset classes and market sectors based upon Fairholme’s assessment of the relative attractiveness of investment opportunities, general market and economic conditions, and fundamental values of securities, as well as expected future returns of investments. The Partnership may also engage in opportunistic hedges and invest in special situations such as reorganizations, recapitalizations, restructurings, and other corporate transactional events. Differences between the investment performance and portfolio composition of the Partnership and other Fairholme investment vehicles are largely attributable to the unconstrained investment approach of the Partnership, including its pursuit of distressed or private investments across a wide range of securities.
Fairholme is a value-oriented, long-term focused investment adviser providing advisory services to individual and institutional clients worldwide, including mutual funds with over 155,000 shareholders.
Founded in 1997 by Bruce R. Berkowitz, Fairholme is based in Miami, Florida. As of March 31 2015, Fairholme had approximately $8.7 billion of assets under management.
In 2010, Mr. Berkowitz was selected as Morningstar’s® Domestic-Stock Fund Manager of the Decade. The Fund Manager of the Decade award is given for “delivering outstanding long-term performance, aligning interests with shareholders, and demonstrating the courage to differ from consensus.”
In 2014, Mr. Berkowitz was named Institutional Investor’s Money Manager of the Year. This award recognizes the U.S. institutional investor “whose innovative strategies and fiduciary savvy resulted in impressive returns in 2013, “and who stood out in the eyes of the investor community for [his] exceptional performance, risk management, and service.”
1 This document does not constitute an offer to sell or the solicitation of an offer to buy an interest in The Fairholme Partnership, L.P. (the “Partnership”), which may only be made at the time a qualified offeree receives a confidential private offering memorandum, which contains important information (including investment objective, policies, risk factors, fees, and tax implications), and only in those jurisdictions where permitted by law. Investors should not construe the contents of this document as legal, tax, investment, or other advice. The Partnership limits its investors to those meeting the definitions of accredited investor in Regulation D under the Securities Act of 1933 (“Securities Act”) and qualified purchaser under the Investment Company Act of 1940 (“1940 Act”). Interests in the Partnership (“Interests”) are being offered in reliance on an exemption from the registration requirements of the Securities Act. The Securities and Exchange Commission has not passed on the merits of the offering or given its approval. The Partnership is not registered under the 1940 Act and therefore the offering is not subject to the investment protections of the 1940 Act. Investing in Interests involves risk, and investors should be able to bear the loss of their investment. Interests have limited liquidity. No secondary market for Interests is expected to develop, and there are legal restrictions on an investor’s ability to withdraw, transfer, and resell Interests. The investment program of the Partnership is speculative and involves risk. The investment portfolio of the Partnership is expected to be concentrated on a limited number of issuers thereby increasing the risk to the Partnership of losses due to adverse events affecting any issuer in the portfolio. There can be no assurance that the Partnership’s investment objective will be achieved.
Note also, net return calculations are based on subscriptions to Series One, which has no management fee, a 15% annual incentive allocation, and a rolling five-year lock-up for withdrawals. For the period January 1, 2013, through December 31, 2013, performance for Series One Interests was derived from the audited financial statements of the Partnership. For the period January 1, 2014, through March 31, 2015, performance for Series One Interests is an estimate based on the performance of the Partnership. The financial statements of the Partnership for the period January 1, 2014, through March 31, 2015, have not been audited. Performance is net of all Series One expenses (including brokerage and other trading costs) and incentive allocations and reflects the reinvestment of dividends and interest. Past performance is not an indication of future performance. The investment return and principal value of an investment in the Partnership will fluctuate so that an investor’s Interests in the Partnership, when redeemed, may be worth more or less than their original cost. The Partnership’s performance may be volatile. Current performance of the Series One Interests may be lower or higher than the performance quoted. Performance among the Series will differ. Note that Series One Interests in the Partnership Account for the period January 1, 2013, through March 31, 2015, were not charged a management fee, only an annual incentive allocation of 15%. Additionally, Series Two Interests and Series Three Interests were not charged management fees, however they were charged annual incentive allocations of up to 20% and 25% of net profits (including unrealized gains), respectively.
2 The S&P 500 Index is a broad-based measurement of changes in the stock market, is used for comparative purposes only, and is not meant to be indicative of the Partnership’s performance, asset composition, or volatility. The Partnership’s performance may differ markedly from the performance of the S&P 500 Index in either up or down market trends. The performance of the S&P 500 Index is shown with all dividends reinvested and does not reflect any reduction in performance for the effects of transaction costs or management fees.
3 The HFRI Fund Weighted Composite Index is a global, equal-weighted index of over 2,000 single-manager funds that report to HFR Database. Constituent funds report monthly net of all fees performance in U.S. Dollar and have a minimum of $50 million under management or a twelve-month track record of active performance. The HFRI Fund Weighted Composite Index does not include Funds of Hedge Funds, is used for comparative purposes only, and is not meant to be indicative of the Partnership’s performance, asset composition, or volatility. The Partnership’s performance may differ markedly from the performance of the HFRI Fund Weighted Composite Index in either up or down market trends.