Clone vs. Fund: Bruce Berkowitz and the Fairholme Fund

Much ado in the press lately about Bruce Berkowitz and his Fairholm Fund. A nice article in the latest issue of Fortune Mangazine calls the manager the "megamind of Miami" and this morning, International Business Times has a glowing article that focuses on his winning position in American Interntional Group (AIG).  The article claims Fairholme is up 24.5% this year versus 15% for the S&P500.  We looked at Fairholm's Top 20 Holding clone to compare performance and found that the clone had underperformed that figure by quite a bit.  However, when we fact checked the article's numbers we couldn't get to their reported 24.5% return.  On Google Finance, looking up Fariholm's flagship mutual fund FAIRX we see the fund is returning 17.9% as of yesterday's close (see graph below).  That figure jibes much better with the performance of his Top 20 Holdings clone, which is returning 17.4% on an equal weighted basis YTD (to yesterday's close).  Looking at the FAIRX tearsheet from Fairholme's' site shows an annualized return of 13.3% since inception for FAIRX (12/29/1999 to 9/30/2010) while his Top 20 Holding clone has returned 10.6% annualized over the same period.