Fairholme Stays the Course

8/2/2019 Fairholme Stays the Course

1/13

Ignore the crowd.Fairholme

FAIRHOLMEIgnore the crowd.


2/13


THE FAIRHOLME FUND (FAIRX)AverageAnnualTotalReturnsasof12/30/2011:

1Year 5Year 10Year

FairholmeFund 32.42% 1.42% 6.54%

S&P500 2.11% .25% 2.92%

30DaySECYield .7485%

ExpenseRatio 1.01%*

*Includesacquiredfundfeesof.01%.AcquiredfundfeesandexpensesarethoseexpensesincurredindirectlybytheFairholmeFundasaresultof

investmentsinsecuritiesissuedbyoneormoreinvestmentcompanies.

CumulativeReturnsasof12/30/2011:

1Year 5Year 10Year

FairholmeFund 32.42% 6.89% 88.40%

S&P500 2.11% 1.24% 33.35%

Performance information quoted above represents past performance and does not guarantee future results. The investment return and

principal value of an investment will fluctuate so that an investors shares, when redeemed, may be worth more or less than their original cost.

Current performance may be higher or lower than the performance quoted herein. The Fairholme Fund imposes a 2.00% redemption fee on

shares held less than 60 days. Performance data does not reflect the redemption fee. If reflected, total returns would be reduced. Fairholme

performance numbers assume reinvestment of dividends and capital gains and include all expenses, including acquired fund fees and expenses

incurred indirectly by the Fairholme Fund in securities issued by investment companies. While the Fairholme Fund has no front or back loads, or

12b1 fees, management fees and other expenses still apply. Any questions you may have, including most recent month end performance, can

be answered by calling Shareholder Services at 1866

202

2263.

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 Funds performance, asset composition or volatility. Given the wide scope of securities held by S&P 500, it should be

inherently less volatile. Our results may differ markedly from those of the S&P 500 in either up or down market trends. The performance of

the S&P 500 is shown with all dividends reinvested into the index and does not reflect any reduction in performance for the effects of

transaction costs or management fees. Investors cannot invest directly in an index.

Additional supplementary information can be found at the end of the presentation.

FAIRHOLME


3/13


GUIDING PRINCIPLES

ShareholdersFirst

DontLose

Focuson

Value

LongTermPerformance

IgnoreThe

Crowd

FAIRHOLME


4/13


Ourperformancesince

inceptionhas

been

quite

good

*Basedontotalreturn.Seelastpageforsupplementaryinformation.

FAIRHOLME

$

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

Performanceofa$10,0

00Invest

ment*

FAIRX S&P500


5/13


And,weve

even

kept

pace

with

our

heroes.

*Basedontotalreturn.Seelastpageforsupplementaryinformation.

FAIRHOLME

$

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

Performanceofa$10,0

00Invest

ment*

FAIRX Leucadia BerkshireHathaway S&P500


6/13


Perception

vs.

RealityWhilenegativemarketsentimentreducedtheFAIRXNAVby32%*in2011,ourportfoliosbookvaluegrewby3%.

* Fairholme performancenumbersassumereinvestmentofdividendsandcapitalgainsandincludeallexpenses.

**

FAIRXNAV

as

of

12/31/2010; Estimated Book

Value

derived

from

Q3

2010

10

Qs.

*** FAIRXNAVasof12/30/2011;EstimatedBookValuederivedfromQ3201110Qs.

$0

$5

$10

$15

$20

$25

$30

$35

$40

FAIRXNetAssetValue(NAV) FAIRXEstimatedBookValue

2010** 2011***

FAIRHOLME


7/13


$

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

P

erformanceofa$10,0

00Investment

*

MungerPartnership DowJonesIndustrialAverage

ValueinvestingisalongtermstrategyevenCharlieMungers private

partnership(pre

Berkshire

Hathaway)

had

tough

investment

periods.

*Seelastpageforsupplementaryinformation.

FAIRHOLME


8/13


1,000

1,050

1,100

1,150

1,200

1,250

1,300

1,350

0%

5%

10%

15%

20%

25%

S&P500Index

FAIRXCash%

FAIRXCash% S&P500

Greedywhenothersarefearful,

andfearful

when

others

are

greedy.

Wheninvestorsarefearful

andprices

are

low,

we

buy.

Whenpricesarehighandinvestors

aregreedy,

we

raise

cash.

FAIRHOLME


9/13


Valueinvestorsdonotequatecurrentvolatility

withrisk

over

the

long

term

Wethinkofriskasthepotentialforpermanentlossofcapital.

Risk:[rsk]Risk:[rsk]

MerriamWebsterDictionary

Thechancethatan

investmentwilllosevalue.


Thechancethatan

investmentwilllosevalue.


Characterizedbyorsubjectto

rapidorunexpectedchange.


Characterizedbyorsubjectto

rapidorunexpectedchange.

Volatility:[voluhtilitee]Volatility:[voluhtilitee]

FAIRHOLME


10/13


$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

FAIRXNetAssetValue(NAV)

FAIRXNAV

15.12%

PeakToTrough

4/30/02:$16.40

2/28/03:$13.92

Span:10Months

RecoveryPeriod

8/29/03:$16.52

Span:16

Months

50.26%

PeakToTrough

10/31/07:$34.82

2/27/09:$17.32

Span:16Months

RecoveryPeriod

4/30/10:$35.20

Span:

30

Months

PeakToTrough

4/30/10:$35.20

6/30/10:$30.30

Span:2 Months

RecoveryPeriod

12/31/10:$35.38

Span:

8

Months

13.92%

Marketpricevolatilityonlymeasures

shortterm

perception

of

long

term

risk.

FAIRXRecoveryPeriods

FAIRHOLME


11/13


Valueis not quite enough. Buying low is a

startbut you need the patience, discipline andgrit to buy lower and still lower if the

opportunity presents itself, shutting out the

extraneous noise coming from within the market

and over the airwaves.

SethA.Klarman

President,TheBaupost Group

April8,2011

Patience,Discipline

and

Grit

FAIRHOLME


12/13


Periodsofvolatilityandstress

sometimesallowwhatwebuy

cheap

to

become

cheaper,

creating

unusualopportunity. Fairholme's

historyincludesmanyinstancesof

shorttermembarrassment

leadingtolongtermvictory.

BruceR.

Berkowitz

LettertoClients

October2006

*Thisposterwasinitiallyproducedin1939bytheUnitedKingdom

MinistryofInformation,andwasintendedtostrengthenmoraleatthe

beginningof

the

Second

World

War.

FAIRHOLME


13/13

Fairholme Stays the Course

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