Berkowitz's no-hedge hedge fund up 33%

For years, Fairholme Capital Management's Bruce Berkowitz was known as the mutual fund manager who acted like a hedge fund activist.

Big and volatile, the Miami-based fund took large positions in companies like real estate developer St. Joe Co., financial giant American International Group and international banking group Bank of America and then pushed for change.

A year ago, Berkowitz formally attempted to manage both a hedge and mutual fund simultaneously. He launched the Fairholme Partnership, a private version of his Fairholme fund with $22 million of his and other employee capital. The hope, he said when opening to outside investors in October, was to raise a billion dollars in a year. It would be a smaller complement to his $11 billion mutual fund using some of the tools his public fund could not.

Now a year old, the equity and bond-focused fund doesn't have a billion dollars—it managed $206 million as of Jan. 1—but is up from $140 million in October.

While the new vehicle is technically a hedge fund, it doesn't act like one. The average net market exposure was 100 percent over 2013; the fund does not short, or bet against the market. A more typical hedge fund net exposure is about 20 percent, meaning long bets only slightly outweigh shorts.