By Daily Crux Editor Sean Goldsmith:

Bruce Berkowitz of Fairholme Fund spoke with Bloomberg at the Morningstar conference in Chicago this week. His value-driven fund has outperformed the S&P 500 for the past five years, ranking in the 95th percentile among peers.

He currently likes "recession proof" sectors like health care and defense. They're generating great free cash flow and announcing great earnings. Fairholme owns 164,000,000 shares of Pfizer and a chunk of WellPoint on the thesis that, "We're all getting older... The baby boomers are retiring." Berkowitz says there is no other alternative to the Pfizers and WellPoints of the world.

He also owns Boeing, and said "the prices have been so decimated," it won't take much for them to soar. In the retail sector, he likes Sears, which he says is throwing off tons of free cash flow.

Berkowitz is only valuing these companies on the cash they currently produce. He doesn't foresee any future problems with government reforms in the health care and defense sectors.

Jim Chanos, the head of short selling hedge fund Kynikos Associates, disagrees. He is short both health care and defense stocks. He believes Obama's regime won't allow these historically high-margin industries to continue with such profitability.

Chanos and Berkowitz are both great investors, but in a street fight, we're siding with Chanos.

Watch the video...

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