In an interview with Barron’s, top fund manager Bruce Berkowitz says that he’s high on some of the firms most beaten down by the financial crisis — including Citigroup and AIG — and that we’re reaching a point where finding “really great investments” is going to become more difficult.
“There were some obvious and wonderful places to invest for those who had cash,” Berkowitz says of the environment around the time of the financial crisis. “Today, as always, we continue to hold lots of cash, and we like very much what we own. But it is going to be more difficult now to find really great investments.” Still, he says his fund has been busy “laying down the last set of investments that should see us through reasonably well for at least the remainder of this year.”
Berkowitz says he thinks financials are through the worst of their loan problems, and are now reaping the benefits of good loans they’ve made more recently.
“It is during tough times that you write your best business, whether it is an auto loan, a mortgage, a credit card, whatever. Your standards are significantly tighter because of what has happened,” he says. “There has been enough time now where financial companies, if they are still around, are getting over the hump of the bad debt and, at the same time, have taken on new loans. So they are through the worst of it with their loans, which they have been writing off at a furious pace. And the loans that they’ve been making since around the end of 2008 have been quite good.”