Bloomberg News

Berkowitz’s Fairholme Trims Regions Financial Stake by Half

October 12, 2011

(Updates with purchase price in sixth paragraph.)

Oct. 12 (Bloomberg) -- Bruce Berkowitz’s Fairholme Capital Management LLC sold more than half its holdings in Regions Financial Corp. in the third quarter as shares of the 10th- largest U.S. bank by deposits plunged.

Fairholme held 60.6 million shares, or a 4.8 percent stake, as of Sept. 30, the firm said yesterday in a regulatory filing. Fairholme had ranked as the biggest holder of Birmingham, Alabama-based Regions as of June 30, with 123.9 million shares, according to an August filing and data compiled by Bloomberg.

Regions slid 48 percent this year, with most of the drop in the third quarter, amid investor concern that a weak economy and extended low interest rates will hurt earnings. The firm is this year’s second-worst performer in the 24-company KBW Bank Index after Charlotte, North Carolina-based Bank of America Corp.

The Fairholme Fund, which had about 70 percent of its investments tied to financial companies as of May 31, has fallen 30 percent this year through Oct. 10, Bloomberg data show.

Tom Pinto, a spokesman for Miami-based Fairholme, didn’t respond to an e-mail seeking comment. Evelyn Mitchell, a spokeswoman for Regions, declined to comment on Fairholme’s share sale.

As of May 31, the Fairholme Fund had acquired 115.8 million shares of Regions at a cost of $669.6 million, or about $5.78 a share, according to an Aug. 2 regulatory filing from Berkowitz’s firm.

Regions, which hasn’t repaid a $3.5 billion U.S. bailout, traded at an average price of $4.82 in the third quarter, according to Bloomberg data. The average price fell to $3.85 in September.

Regions rose 23 cents, or 6.3 percent, to $3.86 at 12:40 p.m. in New York Stock Exchange composite trading.

--With assistance from Miles Weiss in Washington and Charles Stein in Boston. Editors: William Ahearn, Steve Dickson

To contact the reporter on this story: Laura Marcinek in New York at lmarcinek3@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net


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