10 Hated Stocks Loved by Value-Guru Berkowitz

BOSTON (TheStreet) -- Bruce Berkowitz, Morningstar's U.S. stock manager of 2009, has half of his fund's assets in "hated financial-services and real-estate-related companies."

A value-investing guru, Berkowitz is greedy when others are fearful.

The investor runs Fairholme Capital, a mutual fund company with only two funds: the flagship Fairholme Fund(FAIRX) and the Fairholme Focused Income Fund(FOCIX), which debuted this year.

Bruce Berkowitz of Fairholme Capital

Fairholme Fund has delivered a 255% return since its 2000 inception, compared with a 15% loss for the S&P 500. Berkowitz has delivered outstanding results, in up and down years for the market, by holding a concentrated equity portfolio and a cash coffer, with about 20% of assets in short-maturity corporate debt and cash equivalents. Value-conscious Berkowitz concedes that timing is difficult, so he always has cash on hand to scoop up securities under duress.

Fairholme's mantra: Ignore the crowd.

At the end of the latest quarter, Berkowitz held 23 securities in his equity portfolio. Many of his value picks are laggards, such as AIG(AIG) and Sears Holdings(SHLD).

View Berkowitz's Portfolio

Here are 10 cheap, unloved stocks that Berkowitz owns. They've performed miserably over a three-year span and analysts mostly pan them. Still, they may have tremendous potential. The stocks are ordered by book-value multiple, from cheap to cheapest.