Fairholme's strategies are rooted in a school of thought called value investing. This longstanding investment paradigm is built upon ideas set forth by Benjamin Graham and David Dodd in their seminal 1934 text Security Analysis, and popularized by the iconic Warren Buffett. 

Value investing essentially means we buy deeply undervalued securities in expectation that the market will eventually come to appreciate our estimation of their underlying intrinsic values. 

Call us thrifty, penurious, or downright cheap, but we've always tried to pay little in return for a lot. Whether in the supermarket or the stock market, we love a great value, and you probably do, too. So we often wonder why individuals unified in a collective marketplace eagerly overpay for securities, while the same investors, living their day-to-day lives, hunt for bargains and sales on everything else. 

Market bubbles, busts, and manias support the idea that market prices are, to some degree, rooted in misinformation, emotions like hope or fear, or even irrationality -- as with the dot-com boom or the 17th-century tulip mania during which some tulip bulbs sold for ten times the annual income of a skilled craftsman.

Intrinsic values, on the other hand, are calculated by sober analysis and facts. We define intrinsic value as the price a rational and well-informed buyer would pay for an entire business, or the sum of the future cash we expect a business to generate after discharging all liabilities, discounted for the passage of time. Fairholme's research aims to determine a security's current intrinsic value, as opposed to a valuation that stems from hope, confidence, conjecture, or fear.

We pride ourselves on our ability to detect wide disparities between companies' market prices and their intrinsic values. The market sometimes undervalues companies or industries that are under stress or out of favor. We invest when we have compelling and quantifiable reasons that support a valuation that is far higher than the market currently suspects.