Seth Klarman: Soaring Under The Radar (AMZN, EBAY, ADCT, SLRC, THRX, VSAT, ENZN, NWSA)
Insights from Baupost Group manager Seth Klarman are often hard to come by. Perhaps that’s why his book, entitled The Margin of Safety, famously sells for upwards of $1,000 on Amazon.com (AMZN) and eBay (EBAY). Last month, however, Klarman gave a pair of talks at the CFA Institute and Ira Sohn Investment Conference, and didn’t give equity bulls much to get excited for. However, a recent report by Bloomberg indicates just why investors should pay attention to Baupost’s top equity bets.
Klarman, who according to Bloomberg has returned 19% annually since Baupost was founded in 1982, told the CFA Institute that his fund held a massive 30% cash position in May, noting that, “Things are now being priced for almost perfection.” At the Ira Sohn Investment conference, he noted that the government is “kicking problems down the road” with bailout plans and extended periods of low interest rates.
Unlike John Paulson and Steve Eisman, who earned acclaim by betting against the housing market ahead of its collapse during the recession, Klarman claims his fund “rarely ever” sells short. That could be why Baupost posted its second-ever annual decline in 2008, losing -12%, according to Bloomberg. Given his current bearish outlook, and aversion to short-selling, it’s especially interesting to see what stocks were among Baupost’s top-15 U.S.-listed equity positions from the end of Q1. Klarman told Bloomberg, “We are not against owning stocks,” but noted that they haven’t offered bargain prices for most of the last 20 years.
During the first quarter, Klarman was adding new positions in ADC Telecommunications (ADCT) and Solar Capital (SLRC), while boosting existing bets on Theravance (THRX), ViaSat (VSAT), and Enzon Pharmaceuticals (ENZN). Meanwhile, the fund was paring its stake in top position News Corp (NWSA).
To see how you stack up against Klarman, or view some other stocks Baupost has invested in, visit tickerspy.com.
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