Poring over financial reports to pick out gems from the rough helped Bruce Berkowitz become Morningstar's top equity fund manager last decade.
"I was a hero then," he said in a CNBC Pro "Value Spark" interview.
Now, he's in a rough patch himself.
Berkowitz, the founder and chief investment officer of Fairholme Funds, which he started in 1999, sat down this week to discuss the markets, politics, and his current investment picks.
Those picks include Bank of America; preferred shares of government-controlled Fannie Mae and Freddie Mac; northwest Florida developer St. Joe (which investor David Einhorn made a big bet against); and Sears, along with its spin-offs Lands End and Seritage, among a few others.
While Berkowitz is no stranger to hated holdings—he bought into AIG and other beaten-down financials soon after the 2008-09 crisis—investors lately haven't been loving it.
The Fairholme flagship fund is now "on pace for its third consecutive bottom-decile calendar-year finish…after nearly $5 billion in three-year outflows," and even faces "serious liquidity risks," according to Morningstar.