Fairholme's former co-manager Fernandez launches own firm

BOSTON Wed Nov 14, 2012 9:50am EST

BOSTON Nov 14 (Reuters) - Money manager Charles Fernandez is back in business one year after a hasty split from friend Bruce Berkowitz's Fairholme Capital Management, where he had been co-manager.

Fernandez is launching Barnstar Opportunities on Wednesday, which he calls a multi-disciplinary, special situations long bias fund, according to a press release.

Thirteen months ago, Fernandez made headlines when he unexpectedly resigned from Fairholme at a time when the once-vaunted fund was suffering heavy losses and investors began pulling their money in a hurry.

Analysts blamed huge bets on unpopular stocks like insurer American International Group and real estate developer St. Joe for the fund's slump, which left investors with a 32.4 percent loss last year.

Berkowitz, who was named Morningstar Manager of the Decade and enjoys legendary status in investing circles, is known for unconventional bets on undervalued stocks. With Fernandez, he made a similarly unconventional bet, industry analysts have said, by having pushed aside a team of investment professionals at the fund to promote Fernandez, his friend and neighbor in Coral Gables, Florida, to director, president and co-manager of the Fairholme Fund in 2008.

When Fernandez suddenly quit last year, Berkowitz declined to discuss his departure.

Since the split, the $7.5 billion Fairholme Fund, whose motto is "Ignore the Crowd," is again riding high, ranking among the best-performing stock mutual funds during the first half of 2012. It is up 36.67 percent.

Fernandez gave little direct information about his new venture, short of saying he created it to "capitalize on his extensive experience and replicate earlier successes." A spokesman was not immediately available to comment further.

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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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