NEW YORK (
) -- Bruce Berkowitz, whose
plunged 32% in 2011 as bets on
Bank of America
failed, still swears by his investments.
In an interview with Bloomberg television, the fund manager, who was named Morningstar's fund manager of the decade in 2010, said he is still most comfortable with Bank of America within the financials. "I like what Brian Moynihan is doing. I like the trends, I like the honesty. I like the fact that they are ahead of the curve in some areas in favor of consumers," he said. "I like the idea that they stepped up and saved a lot of people with Countrywide. They did not create the Countrywide problem. They bought Countrywide and they are going to fix Countrywide."
Bank of America bought Countrywide in 2008 for $4 billion and inherited a ton of bad mortgages that has resulted in significant losses and endless litigation. The bank has racked up nearly $40 billion in losses since the acquisition.
Shares of Bank of America, which fell nearly 60% in 2011 are up 48% so far in 2012 as some concerns on Europe and on the bank's capital position have eased. "I see Bank of America the way I saw
in the early 90s, when Wells was a very large position," the fund manager said.
Berkowitz also believes that the U.S. Treasury will exit AIG at a profit. "It's in the interest of the company and the shareholders and taxpayers" for the government to stay with AIG as long as it takes to make a profit, Berkowitz said, according to a
report. "If Wall Street believes that the Treasury is going to bail out of AIG then they will push that stock price down as close to zero as possible, which would not be a win for the country, for business, for the cycle, for the recovery of the nation."
Shares of AIG are up more than 15% in 2012. Fairholme is up 9% this year.
Berkowitz remains bullish on financials over all. "We expect over a cycle, systemically important financial institutions that are too big to fail that have been recapitalized will have the ability to earn a 10% return on equity on shareholder's money," he told Bloomberg. "And if you can buy stocks at half shareholders equity or half book value that is 20%. And if for a few years you don't pay significant taxes because of past losses paid by past, older shareholders, it may be even more margin of safety in making a reasonable returns. "
, Wells Fargo and
are some of the other notable picks that figured in Berkowitz portfolio, according to a November filing.
--Written by Shanthi Bharatwaj in New York
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