Bruce Berkowitz On CNBC's Strategy Session (SHLD, AIG, JOE, BAC, GS, MS, RFC, C)

Bruce Berkowitz appeared on CNBC's Strategy Session on Wednesday to talk to Gary Kaminsky and David Faber about his outlook for the economy and his portfolio. Berkowitz manages the $22 billion Fairholme Fund and was named Domestic-Stock Fund Manager of the Decade by Morningstar, Inc. One of Berkowitz's largest positions is in American International Group

, which is 92% owned by the federal government. Berkowitz said that due to Fairholme's size it is important that it is important for him to think about the very long term, and that he believes AIG is very compelling looking out years and years. He noted that the company now has a very strong balance sheet, with great assets and is still selling for less than book value. He said that investors should start focusing on the assets and less on the liabilities when evaluating a company like AIG. He acknowledged the huge overhang of shares that need to be sold by the government, and said that he hopes he is in a position to buy some more down the road. It is clear that Berkowitz is taking a very long term view with his bet on AIG. The next topic of discussion was Fairholme's large stake in St. Joe

. This has been an ongoing story on Wall Street after noted value manager David Einhorn gave a presentation at a conference outlining why he is short JOE. Einhorn, who runs hedge fund Greenlight Capital, has made some prescient short calls in recent years, the most notable of which was in Lehman Brothers which he began betting against in July 2007. Einhorn believes that JOE is carrying its substantial Floridian real estate interests at bloated valuations on its books and should take an impairment charge. Berkowitz is one of JOE's largest shareholders and he and his partner sit on the company's board of directors. Berkowitz said that he read Einhorn's report and that he doesn't necessarily disagree with much that was written, but that he and Einhorn have different opinions with regard to the real estate assets. Berkowitz, again, seems to be interested in the very long term potential of those holdings. The land in question is a very large tract of Gulf Coast property located near a new international airport. He noted that he expects the economy to continue to recover, and that Florida is a tax-free state with a growing population. Berkowitz believes that over time the real estate owned by St. Joe will rise in value, and his substantial bet on the company will be rewarded. The star manager also owns a 12% stake in Sears Holdings

, which has lost around 40% over the last 5 years and has been heavily shorted across Wall Street. He said that he believes all of the pieces of the Sears business are worth more than where the stock is currently trading. He also noted that the company has been aggressively buying back stock as its share price has fallen. He added that the company is attempting a wide variety of changes to its business and that if only a couple of them stuck, it could change SHLD's outlook. He admitted that he is "all in" in SHLD and that given the size of his position, it would take awhile to get out. Berkowitz also revealed that he has more than 20% of his $22 billion portfolio in the financial sector, where he is very bullish. He owns stakes in Regions Financial

, Bank of America

, and CIT Group

among many others. He said that he also likes Goldman Sachs

, Citigroup

and Morgan Stanley

. Berkowitz is primarily attracted to this group because of valuation as many of the stocks are trading below tangible book value. Given the group of companies that Fairholme has in its portfolio, it is hard to describe Berkowitz as anything but an unabashed bull. Similar to someone like John Paulson, his portfolio is comprised of stocks that are almost certain to do well in an economic recovery, but could be a very scary place to be if more waves hit the global financial markets.