By Daily Crux Contributor Ryan Lepine:

Bruce Berkowitz's Fairholme Fund has solidy beaten the S&P 500 over the past 10 years (12% annualized for Fairholme versus -3% for the S&P) by following a simple, value-oriented investing philosophy.

With investments in Big Pharma (Pfizer), Real Estate (St Joe, Sears Holdings), and other diversified holding companies (Berkshire Hathaway, Leucadia), Berkowitz has positioned Fairholme to benefit from inflation.

Like Warren Buffett, Berkowitz says the best way to protect against inflation is not gold, but solid, recession-proof companies with large and increasing free cash flow either paid out as dividends or reinvested in the company at above market returns.

Read on for a great summary of yesterday's second-quarter conference call, where Berkowitz discusses his due diligence principles and his favorite investment themes right now.

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