Oct. 22 (Bloomberg) -- Charles Fernandez, the number two executive at Bruce Berkowitz’s Fairholme Capital Management LLC, resigned from the Miami-based fund company.
Fernandez, president of Fairholme Capital, stepped down Oct. 17, according to a regulatory filing. He left for personal reasons, Berkowitz said in a statement. Two executives, Fred Fraenkel, chief research officer, and Dan Schmerin, director of special situations, joined the firm, according to the statement.
Fernandez’s departure doesn’t signal any change in the company’s strategy of investing heavily in financial stocks, Berkowitz said in the statement. “Current opportunities in the financial-services sector remind me of the early 1990s when it last paid to be greedy while most were fearful,” he said.
Berkowitz, named domestic stock mutual fund manager of the decade by research firm Morningstarm Inc. in 2010, has struggled this year as his bets on banks and insurers failed to pay off. His flagship $8.9 billion Fairholme Fund lost 27 percent through Oct. 20.
The fund had 75 percent of its equity holdings in financial stocks as of May 31, according to Chicago-based Morningstar. Its top holding at the time, New York-based insurer American International Group Inc., has lost 50 percent in 2011.
Fernandez didn’t immediately respond to an e-mail request for comment late yesterday. He co-managed Fairholme Fund as well as two smaller mutual funds run by Berkowitz, according to Morningstar.
St. Joe Board
Fernandez also resigned as a board member of St. Joe Co., northern Florida’s largest landholder, the Watersound, Florida- based company said yesterday in a regulatory filing.
Fairholme is the largest shareholder of the forest products and development company, with about 29 percent of shares as of Sept. 14, according to data compiled by Bloomberg. Fernandez and Berkowitz were elected to the board in March after a shakeup in which Berkowitz criticized the previous management’s spending and corporate governance. Berkowitz is chairman of the company.
St. Joe shares lost 32 percent this year, compared with a 2.8 percent decline for the Dow Jones U.S. Real Estate Index.
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