Seth Klarman's Stock Portfolio Is Up 20%. Here Are His Latest Moves

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Seth Klarman's Stock Portfolio Is Up 20%. Here Are His Latest Moves

I take a closer look at The Baupost Group’s list of stock holdings where values have increased by 21.7% from the previous quarter. Recent stocks purchases including Time Warner Inc (NYSE: TWX), Pioneer Natural Resources (NYSE: PXD), and Cardinal Health Inc (NYSE: CAH).


The Baupost Group’s Latest Form 13F Filing

Seth Klarman is the CEO & President of the Boston based Baupost Group, one of the largest and most successful hedge funds in the world. Klarman, along with Warren Buffett, is also regarded as one of the most successful value investors in the world.

On February 13th, Seth Klarman’s firm The Baupost Group filed its quarterly Form 13F regulatory filing. I reviewed the filing to gain a glimpse into the firm’s large portfolio.

The Baupost Group’s stock portfolio totals $9.8 billion according to the latest filing. The list value of stock holdings is up 21.7% when compared to the last quarter. As a benchmark, the S&P 500 was up 6.1% over the same period. Quite impressive!

Quarter-over-Quarter Turnover (QoQ Turnover) measures the level of trading activity in a portfolio. The Baupost Group’s QoQ Turnover for the latest quarter was 21.6%, so the firm appears to trade a significant percent of its portfolio each quarter.


The Baupost Group’s Largest Holdings

The Ideas section of finbox.io tracks top investors and trending investment themes. You can get the latest data on the holdings discussed below at the Seth Klarman page. The following table summarizes his firm’s largest holdings reported in the last filing:

The Baupost Group Largest Holdings
Ticker Name Holding ($mil) % Of Portfolio
NYSE: SYF Synchrony Financial $1,131.1 11.6%
NYSE: LNG Cheniere Energy, Inc. $1,115.9 11.4%
NASDAQ: VSAT ViaSat, Inc. $984.9 10.1%
NASDAQ: FOXA Twenty-First Century Fox Inc Class A $769.6 7.9%
NYSE: TWX Time Warner Inc $740.9 7.6%
NYSE: AGN Allergan plc $736.1 7.5%
Nasdaq: QRVO Qorvo Inc $732.6 7.5%

The seven positions above represent 63.6% of the fund’s total portfolio.


The Baupost Group’s 7 Largest Purchases

I also used finbox.io to find The Baupost Group’s largest buys last quarter. Here’s the list of the biggest stock purchases determined by comparing the last two filings:

The Baupost Group 7 Largest Purchases
Ticker Name Purchased ($mil) % Of Portfolio
NYSE: TWX Time Warner Inc $740.9 7.6%
NYSE: PXD Pioneer Natural Resources $340.7 3.5%
NYSE: CAH Cardinal Health Inc $157.5 3.2%
NYSE: MCK McKesson Corporation $134.1 2.2%
Nasdaq: QRVO Qorvo Inc $133.2 7.5%
NYSE: ABC AmerisourceBergen Corp. $114.4 1.3%
Nasdaq: FOXA Twenty-First Century Fox Inc Class A $108.8 7.9%

The largest stock purchase for the quarter was Time Warner. The Baupost Group purchased a new $740.9 million position in the company and the stock now represents 7.6% of the firm’s portfolio.


The Baupost Group’s 7 Biggest Sells

Here’s the list of biggest position reductions determined by comparing the last two filings:

The Baupost Group 7 Biggest Sells
Ticker Name Sold ($mil) % Of Portfolio
NYSE: DVMT Dell Technologies Inc $235.7 3.0%
NYSE: PBF PBF Energy Inc $170.2 4.0%
Nasdaq: CDEV Centennial Resource Development Inc $42.1 0.5%
Nasdaq: CAR Avis Budget Group Inc. $39.5 0.5%
Nasdaq: IMOS ChipMOS Technologies Inc – ADR $27.9 0.3%
Nasdaq: SRUN Silver Run Acquisition $21.9 0.3%
Nasdaq: ESRX Express Scripts Holding Co $18.7 1.8%

The largest stock sale for the quarter was Dell Technologies Inc (NYSE: DVMT). The Baupost Group reduced its position in the company by $235.7 million. The stock now represents 3.0% of the firm’s portfolio.


The Baupost Group’s Low P/E Ratio Stocks

The P/E Ratio indicates the multiple of earnings stock investors are willing to pay for one share of the company. A low P/E can indicate either that a company may currently be undervalued or that the company is doing exceptionally well relative to its past trends. The following table summarizes the firm’s holdings with the lowest P/E multiple.

The Baupost Group Low P/E Ratio Stocks
Ticker Name Holding ($mil) % Of Portfolio
Nasdaq: IMOS ChipMOS Technologies Inc 6.2x 0.3%
NYSE: MCK McKesson Corporation 6.3x 2.2%
Nasdaq: RUN Sunrun Inc 6.8x 0.2%
Nasdaq: ESRX Express Scripts Holding Co 11.5x 1.8%
NYSE: SYF Synchrony Financial 13.0x 11.6%
NYSE: PBF PBF Energy Inc 14.7x 4.0%
Nasdaq: FOXA Twenty-First Century Fox 16.9x 7.9%

The cheapest stock that Klarman owns appears to be ChipMOS Technologies Inc (NASDAQ: IMOS) which currently trades at 6.2x earnings.


Klarman’s Value Investing Approach

In 2009, Klarman gave a speech to the Ben Graham Centre for Value Investing in Ontario. During that speech, he shared the following points on investing.

  • He said you should look at the probability and magnitude of a potential loss before focussing on the potential gain of an investment.
  • He also suggested focusing on absolute performance rather than relative performance. By doing so investors will be more aware of the possibility that they will lose money. While those focussed on relative returns are striving to lose less than others, those focusing on absolute returns are focussed on making money and protecting capital.
  • He suggested that investors focus on individual investments rather than top-down, macro investing. Macro investing is very difficult as it involves forecasting economic performance, interest rates, inflation and currency movements – all of which are very difficult to do.

Klarman has also spoken about his philosophy on exiting a position. He likes to buy assets at a discount and then sell them when they appreciate, but before they reach their fair value. In other words, he would rather sell too soon, than risk price weakness just to make the last few percent. Selling early also allows him to buy in again if the price falls.

While it’s helpful to review Klarman’s recent activity, it is important to note that these filings are due 45 days after the quarter end date. Therefore, The Baupost Group’s holdings above represent positions held as of December 31st and not necessarily reflective of the fund’s current stock holdings.

However, most can agree that with thousands of stocks traded on U.S. exchanges, doing thorough research on each one is nearly impossible for smaller investors. Leveraging the resources of the largest hedge funds on Wall Street can be a powerful way to narrow down the list.


Author: Matt Hogan

Expertise: Valuation, financial statement analysis

Matt Hogan is a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock.

His work is frequently published at InvestorPlace, Benzinga, ValueWalk, AAII, Barron’s, Seeking Alpha and investing.com.

Matt can be reached at matt@finbox.io.

As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.

Seth Klarman's Stock Portfolio Is Up 20%. Here Are His Latest Moves

Seth Klarman's Stock Portfolio Is Up 20%. Here Are His Latest Moves

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Source: 13F Filings Importer
Seth Klarman's Stock Portfolio Is Up 20%. Here Are His Latest Moves

Expertise: Valuation, financial statement analysis. Matt Hogan is also a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock. His work is frequently published at InvestorPlace, Benzinga, ValueWalk, AAII, Barron’s, Seeking Alpha and investing.com. Matt can be reached at matt@finbox.io or at +1 (516) 778-6257.

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