Bruce Berkowitz of Fairholme Funds has some of the best long-term investment returns in the industry.  He employs a value investing methodology very similar to us, by focusing on fundamentals and taking a more concentrated approach.  Why would you allocate the same amount of money to your 10th best idea as you would your first best idea?  Last year his fund was down by 11%, consistent with a lot of the value managers since so much of the performance of the S&P 500 was due to just a few of the most expensive stocks in the index, many of which have since retreated.  It is important to understand that in value investing, one is never buying companies that are deemed popular.  There are always issues, which is what creates the value.  Over the short-term, prices can get out whack for quite some time, but over the long-term prices converge towards intrinsic value.  By understanding intrinsic value, we are able to take advantage of the ebs and flows of the market, as opposed to falling prey to its manic depressive tendencies.

Below are a few excerpts:

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Fairholme Capital Management, L.L.C. Portfolio Manager’s Report – 2015