Sears Holding Corp. is testing Bruce Berkowitz’s investment thesis: follow the tangible assets.

In his annual letter to the shareholders of Fairholme Funds Inc., chief investment officer Berkowitz, said: “Focusing on tangible assets has served us over many years, but most believe Sears to be the exception to the rule. Disruptive technologies; near-zero cost of capital; and few, if any, legacy obligations provide young competitors with great advantages over old-line operators.”

Just as Airbnb has become the world’s largest lodging company without owning a single hotel room, he said: “Amazon crushes competition without a physical retail footprint. Megatech companies are now trusted in all aspects of personal and corporate life.”

Fairholme owns 25.2 percent of Sears, or 27 million shares, the value of which have been falling.

Sears hit new all-time lows last week, losing 20.5 percent of its value over the five-day trading stretch as debt watchdog Fitch Ratings warned the firm would burn through $1.8 billion in cash this year.

The stock finally started to recover Tuesday, rising 1.8 percent to $6.98, leaving the massive retailer with a market capitalization of just $747 million.

The company has been selling off assets to keep afloat, but chief executive officer Edward Lampert seen by some as starting running out of things to sell.

Berkowitz countered, “Sears has degraded net asset values, but there is still much left and the company is fixing its cash drain.”

He noted that the company recently cut a $775 million deal to sell the Craftsman brand, is shutting 150 stores this year and looking sell more real estate.

Those hopes are in keeping with Berkowitz’s general optimism.

“Since Fairholme’s inception, we have pursued a value-oriented investment approach that avoids popular securities in favor of companies that are both unloved and undervalued,” he said. “Although the world has become more uncertain and the recognition of value is taking longer, we remain optimistic. Business cycles exist. History continues to rhyme. Investors march to the drums of both greed and fear. Markets move with asset values, but not always.”

Sears, at least for now, is the exception.