A real Chelsea success story

July 15, 2010
By

Bruce Berkowitz remembers vividly his days growing up on Washington Avenue, attending the Prattville, Carter, and Williams schools, enjoying the company of good friends and the good times at the old Chelsea Y.M.H.A.

And there are people still living and working in the city who remember Bruce Berkowitz as an extremely bright, personable and confident youth, destined for success.

Those people would be right on the mark, because today, Bruce Berkowitz, 52, is the managing member and chief investment officer of Fairholme Capital Management and president and director of Fairholme Funds Inc. Berkowitz is the founder of the Miami-based investment firm and mutual fund.

Sue Clark, executive director of the Choice Thru Education program, is a community leader in Chelsea who remembers Berkowitz as a youth who just needed a little guidance toward the right path. She said Joel Uchenick was one of Berkowitz’s earliest mentors.

“I remember that Joel Uchenck, who worked in the Upward Bound program, was one of Bruce’s mentors,” said Clark. “I think Joel really put him on the path where he would go to school and was always advising him. They had a wonderful relationship.”

Clark related how Berkowitz impressed people with his intelligence and warm and friendly manner.

“It was obvious how very bright Bruce was,” said Clark. “Even though he was sort of rebelling, you didn’t have the sense that it was going to be, shall we say, fatal. It was just that he needed the time to grow up and then realize what he really wanted to do. And Joel always felt that Bruce was somebody who could do so well. I think he looked at Bruce almost like a little brother.”

Berkowitz, son of Hennie Berkowitz and the late Barney Berkowitz, spent one year at Chelsea High School and Huntington Prep before graduating from Beaver Country Day School. He matriculated at the University of Massachusetts where he received a Bachelor of Arts in Economics in 1980.

“I was married, turned 21, and graduated from UMass all in the same week,” said Berkowitz, who has two sons, ages 24 and 21, and a daughter, 17.

After graduating from UMass, he took a job at the Strategic Planning Institute in Cambridge, a management consulting firm. He joined Merrill Lynch in London in 1983. In 1986 he joined Lehman Brothers in London before moving to New Jersey in 1989, continuing his employment with Lehman Brothers as a senior portfolio manager. In 1993 he became a managing director of Smith Barney Investment Advisers.

In 1997 Berkowitz started his own firm, Fairholme Capital Management. “Fairholme was the name of the last street on which I lived,” Berkowitz. “I decided to start my own firm because I had ideas on how to do it better.”

In 1999, Berkowitz created the Fairholme Fund. It’s a mutual fund that has experienced tremendous growth under Berkowitz’s guidance. Fairholme was rated the No. 1 mutual fund manager of the year and the decade in the United States.

“I’m honored by that designation as the No. 1 fund in the country,” said Berkowitz humbly.

The Fairholme Fund and its affiliates have $16 billion – that’s right, $16 billion. The fund has more than 400,000 shareholders.

“Our clients are individuals, companies, foundations, and pension funds all around the world,” said Berkowitz. “It’s nice when you do well for people with their investments, especially people who can really use the extra money.”

Berkowitz said some of the lessons he learned growing up in the streets of Chelsea have helped him along the way.

“I attribute a lot to my growing up in Chelsea,” said Berkowitz. “I was delivering newspapers in Chelsea at 6 in the morning to multi-family houses. I worked at Revere Beach on the boulevard at all hours. When I was growing up, I thought Chelsea was the world. I don’t think I saw any other part of the world until my days in A.Z.A. [a Chelsea Jewish youth organization] and attending parties.”

Berkowitz rise to the top of his profession has been noteworthy. He has become a celebrity in his field, frequently called upon for his expertise by CNBC, Bloomberg, NPR and other national television and radio networks. Berkowitz’s individual success story has been featured in Business Week, Barron’s, the Wall Street Journal and other major publications.

And there seems to be no limit to Berkowitz’s reach. Fairholme is involved with owning General Growth Properties, one of the largest real estate companies in the United States. General Growth owns Faneuil Hall/Quincy Marketplace in Boston and 220 other malls. Fairholme is the largest owner of AIG after the U.S. government. It is the second largest owner of Sears and Kmart.

Does Bruce Berkowitz enjoy his work and the prestigious position he holds in the business world?

“I love what I do,” said Berkowitz. “You tend to like what you do well. I wish I could like golf, but I can’t hit that ball, so I don’t like it. If I could hit the ball straight, I’d like golf.”

He likes making all of his investors happy, but especially so, the smaller ones.

“How much fun is it to make $10 million for someone who already has $10 million – what’s the point? It’s much fun to make $10,000 for someone who only has $10,000 to invest. That’s much more meaningful for someone than giving someone another $10 million. I like making people money, especially people who need it.”

Berkowitz remains committed to charitable endeavors. The Fairholme Foundation donates to colleges, schools, and organizations

Berkowitz is enjoying life in south Florida. He is excited about the addition of Lebron James and Chris Bosh to the Miami Heat roster.

“I was just about to give up my Heat season tickets and now I’m glad I didn’t,” he said.

Berkowitz hopes to get back to Chelsea at some point.

“I have very fond memories of my days in Chelsea – growing up there, Mr. Denning at my elementary school, the Y.M.H.A., my newspaper routes, AZA, working on Revere Beach,” he said. “I hope to visit Chelsea soon.”

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