This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Berkowitz Torn by AIG/Bank of America Lawsuit

BOSTON ( TheStreet) -- Among the many investors having a bad day today is Fairholme Fund (FAIRX) manager Bruce Berkowitz.

The mutual-fund manager's largest holding is insurer American International Group (AIG - Get Report), which announced today it is suing Bank of America (BAC - Get Report), which is in the No. 4 position. AIG represents 17% of the $16 billion fund, and Bank of America almost 6%.

Both stocks are taking a beating today, with Bank of America shares the most active, losing 17% of their value, while AIG's shares are down 10%.

Bruce Berkowitz, manager of the Fairholme fund (FAIRX)

Fairholme Funds' motto, "ignore the crowd," is being tested in the stock-market sell-off. The fund is down 21% this year versus the 3.6% decline of the S&P 500 Index.

Berkowitz, 52, has been a golden boy among contrarian investors, as he's successfully made big bets on out-of-favor stocks. His fund has a 10-year average annual return of 8.6%, putting it in the top 1% of the large value fund category in terms of performance. The S&P 500 gained 1.8% in the same period

AIG is suing Bank of America for $10 billion over alleged mortgage-securities fraud. AIG claims it lost $28 billion. The insurance conglomerate claims that Bank of America "caused billions of dollars in damage" to its business through alleged "fraudulent activity."

The suit names the bank, its Countrywide Financial mortgage subsidiary and its brokerage arm, Merrill Lynch, for misrepresenting the quality of mortgages placed in securities and sold to investors. The bank acquired both firms in 2008 after the financial industry meltdown of 2008.

Bank of America is the largest U.S.-based financial holding company, with assets of $2.3 trillion.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AIG $56.99 0.00%
BAC $15.64 0.00%
AAPL $130.28 0.00%
FB $81.53 0.00%
GOOG $565.06 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs