Thanks to Will for passing this along.
Bruce Berkowitz is starting to sweat. It's just after 5 a.m. on a Thursday, and the man who is arguably the top mutual fund manager on the planet is briskly walking his usual morning route on the mansion-lined streets of his gated neighborhood in Coral Gables, Fla., just outside Miami. Alongside him is his investing partner, right-hand man, and next-door neighbor, Charlie Fernandez, who is furiously scrolling through e-mails on his BlackBerry as the two bat around ideas for the portfolio of Fairholme, (FAIRX) the $17 billion fund Berkowitz started 11 years ago. "Out here you can actually think," says Berkowitz, explaining the appeal of an hour of daily pre-dawn speed-walking to a visitor hustling to keep pace.
As he charges through the darkness in shorts, running shoes, and a black University of Miami zip-up hoodie, Berkowitz bounces from topic to topic in his typical scattershot way. He and Fernandez have just returned from an eight-day fact-finding trip to China -- he's bullish but wishes he'd gotten in 10 years ago -- packed so full of meetings that, Berkowitz says, they slept a mere 24 hours total. Next he jumps to the bold investments that he and Fernandez have made -- hedge-fund-like maneuvers involving both equity and debt -- in subprime lender AmeriCredit and then-bankrupt mall owner General Growth Properties (GGP), moves that have netted his fund a profit of $2 billion.
Finally, on the fourth or fifth pass down his block, Berkowitz, 52, gets around to the biggest and most public wager of his life: his $5 billion bet on the resurgence of Wall Street. Fairholme is now the largest shareholder of AIG (AIG) after the U.S. government, with a $1.5 billion position in the insurance giant. And Berkowitz has also taken huge stakes in Citigroup (C), Goldman Sachs (GS), Morgan Stanley (MS), and Bank of America (BAC). "We're going to make more on these names than we have on anything," he declares, as the sun begins rising behind the palm trees.