Seth Klarman - Baupost Group Portfolio
Seth Klarman - Baupost Group Q1 2024 Portfolio
Baupost Group, a hedge fund managed by Seth Klarman, disclosed 21 security holdings in their SEC 13F filing for the first quarter of 2024, with a total portfolio value of $3,548,226,000
As of Q1 2024, Seth Klarman’s portfolio showcases his diverse investments and notable strategic adjustments across various sectors. Below is a detailed overview of his top holdings:
LBTYK – Liberty Global Ltd CL C
- Portfolio Allocation: 21.03%
- Recent Activity: No change
- Shares Held: 42,311,011
- Reported Price: $17.64 per share
- Value at Reported Price: $746,366,000
Liberty Global Ltd CL C is the largest holding in Klarman’s portfolio, reflecting a strong conviction in the company’s long-term prospects.
GOOG – Alphabet Inc. CL C
- Portfolio Allocation: 12.69%
- Recent Activity: Added 0.28%
- Shares Held: 2,957,652
- Reported Price: $152.26 per share
- Value at Reported Price: $450,332,000
The slight increase in Alphabet shares signifies Klarman’s confidence in the tech giant’s continued growth and market dominance.
WTW – Willis Towers Watson plc
- Portfolio Allocation: 12.06%
- Recent Activity: No change
- Shares Held: 1,555,667
- Reported Price: $275.00 per share
- Value at Reported Price: $427,808,000
Willis Towers Watson remains a significant holding, highlighting Klarman’s trust in the financial services and consulting sector.
FIS – Fidelity National Information Services
- Portfolio Allocation: 11.66%
- Recent Activity: Reduced 12.29%
- Shares Held: 5,578,969
- Reported Price: $74.18 per share
- Value at Reported Price: $413,848,000
The reduction in Fidelity National Information Services shares indicates strategic rebalancing while maintaining a considerable position.
VSAT – Viasat Inc.
- Portfolio Allocation: 7.66%
- Recent Activity: Reduced 7.07%
- Shares Held: 15,030,838
- Reported Price: $18.09 per share
- Value at Reported Price: $271,908,000
Viasat’s decreased position reflects a cautious outlook or profit-taking strategy in the communications sector.
CRH – CRH plc
- Portfolio Allocation: 6.59%
- Recent Activity: Reduced 19.01%
- Shares Held: 2,709,543
- Reported Price: $86.26 per share
- Value at Reported Price: $233,725,000
A significant reduction in CRH shares suggests a reassessment of the company’s value or market conditions.
CLVT – Clarivate Plc
- Portfolio Allocation: 6.41%
- Recent Activity: Added 19.99%
- Shares Held: 30,598,402
- Reported Price: $7.43 per share
- Value at Reported Price: $227,346,000
The substantial increase in Clarivate shares indicates a strong belief in the company’s potential for future growth.
LSXMK – Liberty SiriusXM Series C
- Portfolio Allocation: 3.64%
- Recent Activity: Reduced 70.70%
- Shares Held: 4,351,048
- Reported Price: $29.71 per share
- Value at Reported Price: $129,270,000
The significant reduction in Liberty SiriusXM Series C shares points to a strategic shift or profit realization.
LBTYA – Liberty Global Ltd CL A
- Portfolio Allocation: 3.43%
- Recent Activity: No change
- Shares Held: 7,194,276
- Reported Price: $16.92 per share
- Value at Reported Price: $121,727,000
Liberty Global Ltd CL A remains a core holding, reflecting consistent confidence in the company.
JAZZ – Jazz Pharmaceuticals plc
- Portfolio Allocation: 2.83%
- Recent Activity: No change
- Shares Held: 833,696
- Reported Price: $120.42 per share
- Value at Reported Price: $100,394,000
Jazz Pharmaceuticals continues to be a significant part of the portfolio, indicating trust in the biotech sector’s growth potential.
Other Notable Holdings:
- LSXMA – Liberty Sirius XM Series A: 2.24% of the portfolio, reduced by 67.26%, valued at $79,526,000.
- J – Jacobs Solutions Inc.: 2.2% of the portfolio, reduced by 30.37%, valued at $77,908,000.
- EXP – Eagle Materials Inc.: 2.01% of the portfolio, added, valued at $71,199,000.
- TBPH – Theravance Biopharma Inc.: 1.67% of the portfolio, reduced by 11.12%, valued at $59,149,000.
- WCC – WESCO International Inc.: 0.99% of the portfolio, added, valued at $35,236,000.
- WBD – Warner Bros. Discovery Inc.: 0.91% of the portfolio, reduced by 85.28%, valued at $32,423,000.
- HLF – Herbalife Nutrition Ltd.: 0.64% of the portfolio, added, valued at $22,561,000.
- GDS – GDS Holdings Ltd: 0.49% of the portfolio, added, valued at $17,290,000.
- ATUS – Altice USA, Inc.: 0.35% of the portfolio, no change, valued at $12,462,000.
- FTRE – Fortrea Holdings Inc: 0.34% of the portfolio, added, valued at $12,194,000.
- SOUN – Soundhound Ai Inc A: 0.16% of the portfolio, added, valued at $5,554,000.
Overall, Seth Klarman’s Q1 2024 portfolio reflects a blend of strategic reductions and additions, maintaining a diversified approach with substantial investments in technology, healthcare, and financial services. His adjustments demonstrate careful portfolio management aimed at balancing risk and reward while staying true to value investing principles.
Seth Klarman - Baupost Group Q4 2023 Portfolio
Baupost Group, a hedge fund managed by Seth Klarman, disclosed 23 security holdings in their SEC 13F filing for the fourth quarter of 2023, with a total portfolio value of $4,585,037,000
Top 10 Holdings
Liberty Global Ltd CL C (LBTYK)
A multinational telecommunications company, Klarman might have invested in Liberty Global for its potential undervaluation and steady cash flow from a large customer base in various countries.
- 17.2% of Portfolio
- Recent Activity: No change reported
- Shares: 42,311,011
- Reported Price: $18.64
- Value: $788,677,000
Viasat Inc. (VSAT)
With its significant drop in current price, Baupost might see Viasat, a communications company, as a deep value play with the potential for recovery as demand for satellite and wireless services grows.
- 9.86% of Portfolio
- Recent Activity: No change reported
- Shares: 16,174,839
- Reported Price: $27.95
- Value: $452,087,000
Liberty SiriusXM Series C (LSXMK)
This investment could be based on the steady, subscription-based revenue of SiriusXM’s satellite radio business, which has a strong consumer foothold.
- 9.32% of Portfolio
- Recent Activity: No change reported
- Shares: 14,851,048
- Reported Price: $28.78
- Value: $427,413,000
Alphabet Inc. CL C (GOOG)
Despite reducing the position, the investment in Alphabet reflects confidence in the long-term growth of its core businesses, including search, advertising, and cloud computing.
- 9.07 % of Portfolio
- Recent Activity: Reduced 23.02%
- Shares: 2,949,538
- Reported Price: $140.93
- Value: $415,678,000
Fidelity National Information Services (FIS)
FIS’s role in financial services technology could position it well for growth in the fintech space, which might explain Baupost’s interest despite a slight reduction in shares.
- 8.33% of Portfolio
- Recent Activity: Reduced 8.61%
- Shares: 6,360,719
- Reported Price: $60.07
- Value: $382,088,000
Willis Towers Watson plc (WTW)
As a global advisory and brokerage firm, WTW may offer a defensive play with a stable client base and potential for growth in risk management services.
- 8.18% of Portfolio
- Recent Activity: No change reported
- Shares: 1,555,667
- Reported Price: $241.20
- Value: $375,227,000
Warner Bros. Discovery Inc. (WBD)
The media company may be seen as undervalued, especially after the merger of WarnerMedia and Discovery, with a potential upside from synergies and a strong content library.
- 6.26% of Portfolio
- Recent Activity: No change reported
- Shares: 25,235,094
- Reported Price: $11.38
- Value: $287,175,000
Clarivate Plc (CLVT)
Clarivate’s analytics and insights could be critical for innovation and research, making it an attractive investment with the potential for consistent growth.
- 5.15 % of Portfolio
- Recent Activity: Added 13.33%
- Shares: 25,500,000
- Reported Price: $9.26
- Value: $236,130,000
Liberty Sirius XM Series A (LSXMA)
Similar to LSXMK, this investment likely hinges on the predictable cash flows from the satellite radio business and a solid subscriber base.
- 5.13% of Portfolio
- Recent Activity: No change reported
- Shares: 8,177,656
- Reported Price: $28.74
- Value: $235,026,000
CRH plc (CRH)
As a leading building materials business, CRH could be viewed as a play on global infrastructure growth and urbanization, potentially undervalued relative to its market position.
- 5.05% of Portfolio
- Recent Activity: No change reported
- Shares: 3,345,543
- Reported Price: $69.16
- Value: $231,378,000
Seth Klarman’s Baupost Group is known for a value-driven investment philosophy that often includes a long-term, contrarian approach. Each of these investments aligns with Klarman’s known strategy of seeking out undervalued securities with the potential for a re-rating in the market. He often chooses companies with strong fundamentals that may be temporarily out of favor due to market overreactions or other transient factors.
Analyzing LBTYK from Seth Klarman's Perspective
Analyzing Liberty Global plc (LBTYK) from Seth Klarman’s perspective involves a deep dive into the fundamentals of the company, considering Klarman’s value-driven investment philosophy that focuses on buying securities at a discount to their intrinsic value with a significant margin of safety.
Revenue Trends:
As of February 17, 2024 Liberty Global’s revenue shows a decline over recent years with a slight uptick in the trailing twelve months (TTM). Klarman would likely scrutinize the factors leading to the -30.22% drop in 2022, assessing whether this decline is temporary or part of a longer-term trend.
Profitability Concerns:
The company has reported significant net losses, including -$4.05 billion in the TTM, which may raise red flags. However, Klarman would analyze if these losses are due to non-recurring charges or fundamental issues with the business model.
High Gross Margins:
The gross margin of 68.17% indicates strong potential for profitability, which Klarman may find attractive if he believes operational efficiency can improve.
Operating Cash Flow and Free Cash Flow:
Liberty Global has a positive operating cash flow of $2.17 billion and a free cash flow of $779.90 million, which are metrics Klarman values highly as they indicate the company’s ability to generate cash.
Debt Management:
With a debt to equity ratio of 0.91 and substantial net debt of -$14.01 billion, Klarman would carefully evaluate the company’s debt levels, considering whether the interest coverage ratio and the cash flows can comfortably service this debt.
Asset and Investment Valuation:
Given Klarman’s emphasis on assets, the book value per share of $50.23 compared to the market price would be of particular interest. He might also consider the EBITDA margin and EBIT margin, despite them being negative, to understand the underlying assets’ profitability.
Share Buybacks:
The buyback yield of 14.04% implies the company is returning value to shareholders through share repurchases, a strategy Klarman might appreciate if he believes the shares are undervalued.
Valuation Ratios:
The absence of a PE ratio due to net losses would require Klarman to look at other valuation measures. A P/FCF ratio of 9.22 might suggest that, despite the losses, the company is undervalued based on its cash flow generation capabilities.
Investment Thesis:
Considering the negatives, such as the profit margin and recent revenue declines, alongside the positives, like strong gross margins and free cash flow, Klarman would likely weigh whether the current market price offers a sufficient margin of safety. He would consider the company’s strategic initiatives, competitive position, and the industry’s future to determine if the intrinsic value of Liberty Global is higher than the market reflects.
In conclusion, from Seth Klarman’s perspective, Liberty Global could be an interesting opportunity if the company’s challenges are temporary or fixable and the underlying value of the company’s assets and cash-generating ability is deemed to be significantly higher than the current market valuation.
Who is Seth Klarman ?
1957:
Born on May 21, 1957, in New York City, USA.
1979:
Graduates from Cornell University with a degree in economics.
1979-1981:
Works as an analyst at the Mutual Shares fund.
1982:
Founding of Baupost Group: After working at several financial firms, Klarman founded Baupost Group with just $27 million in assets under management.
1991:
Publication of “Margin of Safety”: Seth Klarman authored a book titled “Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor.” The book is highly regarded among value investors and became a sought-after, rare collector’s item due to its limited print run.
1995:
Klarman Becomes chair of Facing History and Ourselves, an educational organization that promotes tolerance and understanding.
2008:
Klarman is selected as lead editor of the sixth edition of Security Analysis, a seminal work on value investing by Benjamin Graham and David Dodd.
2008 Financial Crisis:
During the 2008 financial crisis, Baupost Group performed exceptionally well, achieving positive returns while many other funds suffered significant losses.
2011:
Klarman receives the Alumni Achievement Award from Harvard Business School.
2020:
Klarman is elected to the American Academy of Arts and Sciences.
Interesting Facts
Klarman is known for his deep value investing approach, focusing on undervalued assets, distressed securities, and special situations.
He values privacy and operates with a conservative approach in managing Baupost Group.
Seth Klarman is actively involved in philanthropy, supporting various causes and organizations, including education, medical research, and social services.
Klarman is often compared to value investing legends such as Warren Buffett and Benjamin Graham.
Seth Klarman's Investing Principles
The single greatest edge an investor can have is a long-term orientation
Over the long run, the crowd is always wrong
Value investing requires a great deal of hard work, unusually strict discipline, and a long-term investment horizon
Once you adopt a value-investment strategy, any other investment behavior starts to seem like gambling
Investing is the intersection of economics and psychology
The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions