Seth Klarman

Seth Klarman

Last Update: 01-08-2016

Number of Stocks: 40
Number of New Stocks: 8

Total Value: $5,971 Mil
Q/Q Turnover: 28%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

Seth Klarman Watch

  • Guru Stocks Trading Below Peter Lynch Value

    According to GuruFocus All-in-One Screener, several gurus are focusing on stocks whose Peter Lynch fair value is far above the current price. The following stocks are trading with a wide margin of safety, and at least five gurus are shareholders.

    AerCap Holdings NV (AER) is trading at about $28 per share, and the Peter Lynch value gives the stock a fair price of $135.01, giving the stock a margin of safety of 79%.


  • Seth Klarman Bets the Farm on Cheniere Energy

    As the author of "Margin of Safety," Seth Klarman (Trades, Portfolio) is often known for his conservative, value-based approach. Recently, however, followers have been surprised at many of his largest positions. Not only do they include volatile biotechnology names like Atara Biotherapeutics Inc. (NASDAQ:ATRA) and Forward Pharma AS (NASDAQ:FWP), but it looks like he’s put 18% of his entire portfolio in Cheniere Energy Inc. (LNG).

    Now controlling 15% of the entire share base, Klarman purchased his stake over the past two years, paying up to $76 a share in 2014. On Dec. 31, 2015, he increased his position by 64%, paying a much lower $37.25 a share. Since then, the stock has continued sinking, hitting a 52-week low recently of about $27 a share. Is this a chance to buy into a famed value investor’s best idea at a much more attractive price than he paid?


  • Why I'm Moving Slowly as Markets Fall

    With the Standard & Poor's 500 down roughly 5% in January and continuing to move lower in the early days of February, I’ve noticed an uptick in websites / blogs with authors pitching long-term buying opportunities. While I certainly don’t disagree with their thinking (lower prices improve forward returns), some simple math will help explain why I’m not so convinced yet.

    Let’s assume that “ABC” was trading at $100 per share at the start of 2016 and fell in line with the S&P 500 for January (to ~$95 per share). If you require 15% annualized returns and define “long term” as five years or more, that implies “ABC” will need to be traded at ~$191 per share by 2021 to meet your return requirement from today’s levels ($95 per share).


  • 3 Investment Opportunities Insiders and Gurus Are Buying

    GuruFocus has various tools and screeners available to make the quest for your next great investment a little bit more efficient.

    A tool of which I am fond is the Double Buy screen. By employing it you can easily screen a list of stocks that have been double tapped by both gurus and insiders. Both types of events tend to trigger my interest, but when they occur simultaneously it is time to pay close attention. I regularly review the list, and these are currently the top three stocks that come up on the screen:


  • Should We Use EBITDA to Compute True Business Earnings?

    In the business valuation process, many Wall Street firms and investors have used EBITDA as a measure of business cash flow, and EBITDA multiple to determine the appropriate valuation of the business. However, there are other opinions that EBITDA is often a misleading number for real business operating performance. Let’s take a closer look to see whether we should use EBITDA in our valuation process.

    What is EBITDA?


  • Seth Klarman Comments on a Bad 2015

    As you might know, some of Seth Klarman (Trades, Portfolio)'s comments from the 2015 Letter to Investors have been disclosed. It is important to note that, since its inception 33 years ago, this is only the third year in which the fund has had a drawback. Overall, the result of its publicly traded positions was a loss of 6.7%, while the private investment portfolio raised 2.4%. Generally, Klarman is very blunt and straightforward in his comments yet, with a great deal of insight and wisdom, embedded.

    "Value investors must be strong and resilient, as well as independent-minded and sometimes contrary," he wrote. "You don't become a value investor for the group hugs. Indeed, one can go long stretches of time with no positive reinforcement whatsoever. Unlike some other fields of endeavor, in investing you can do the same thing as yesterday but achieve completely different reported results. In the long run, the research and analysis you perform should overcome market forces; the fundamentals ultimately matter. But in the short run, markets can trump effort and insight."


  • Klarman Gives Insight on Keryx Biopharmaceuticals Investment

    Back in November, I tried to guess Seth Klarman's (Trades, Portfolio) motives for investing in Keryx Biopharmaceuticals (NASDAQ:KERX), an unusual biotech position for the renowned value investor. In his latest letter to shareholder, the secretive guru has finally commented on this company. In November I wrote:


  • Seth Klarman Blames Market, Investments for Rare Down Year

    One of the most widely followed and profitable value investors, Seth Klarman (Trades, Portfolio) told clients that in 2015 his firm Baupost Group lost money for the third year in its history.

    According to a letter and investor update reported by Business Insider, his fund’s public investments portfolio lost 6.7% and private investments portfolio gained 2.4%, while the Standard & Poor’s 500 Index ended the year down 0.73%. The slide broke Klarman’s run of six consecutive years of positive returns. He is said to have returned 17% on an annualized basis since his fund’s inception in 1982.


  • How Much Research and Analysis Are Sufficient?

    As investors, we commonly face the dilemma of assigning time to different tasks, however, given that our time is limited, we need not only to prioritise, but also be very efficient in our research. How much time should we spend on researching companies, and how deep should our research be? In "Margin of Safety," Seth Klarman (Trades, Portfolio) comments upon this and provides us great insights on how to move faster as we do research.

    "Some investors insist on trying to obtain perfect knowledge about their impending investments, researching companies until they think they know everything there is to know about them. They study the industry and the competition, contact former employees, contact former employees, industry consultants, and analysts, and become personally acquainted with top management. They analyze financial statements for the last decade and stock price trends for even longer. This diligence is admirable, but it has two shortcomings. First, no matter how much research is performed some information always remains elusive; investors have to learn to live with less than complete information. Second, even if an investor could know all the facts about an investment, he or she would not necessarily profit.


  • Stocks in the Spotlight

    Indexes finished slightly up on Thursday but well off the session highs. There were some comments out of Davos, Switzerland, that the European Central Bank will offer more stimulus at its next meeting in March.

    If you own anything related to energy, Khalid al-Falih, chairman of Saudi Aramco, had an interesting comment, saying oil has “overshot” to the downside, and it is inevitable that the price will start turning higher. As expected, oil prices and energy stocks related to oil had a nice rebound. Khalid’s comments come at the same time T. Boone Pickens is calling a bottom in oil. Several energy companies Pickens has purchased recently are:


  • Seth Klarman on Contrarian Thinking

    As the market keeps suffering losses, several renowned investors have tried to shed some light regarding the direction a true investor must take, such as Howard Marks (Trades, Portfolio) with his most recent memo, "What Does The Market Know?" In times of turbulence, I find it refreshing to re-read some of these investors, and while bear markets are usually when a value investor prefers to enter positions, Seth Klarman (Trades, Portfolio) provides a warning on being contrarian just for the sake of it in his book, "Margin of Safety."

    "Value investing by its very nature is contrarian. Out-of-favor securities may be undervalued; popular securities almost never are. If value is not likely to exist in what the herd is buying, where may it exist? In what they are selling, unaware of, or ignoring. When the herd is selling a security, the market price will fall well beyond reason. Ignored, obscure, or newly created securities may similarly be or become undervalued."


  • Seth Klarman: Value Investing Shines in a Declining Market

    One of the most prominent value investors of our time, Seth Klarman (Trades, Portfolio), discussed how value investing thrives on declining markets, which is a soothing reading after the recent market turmoil, in his very hard-to-get book, "Margin of Safety."

    First, Klarman comments upon the relative ease with which investors make profits in a bull market. However, as Buffett once mentioned, "Only when the tide goes out do you discover who's been swimming naked." As expectations are incorporated into prices, comparison bases are also raised higher, making estimates harder and harder to beat. As the market turns, it is often "hot" stocks that get punished first. This is an advantage for value investors, as they generally pick out-of-favor stocks that have depressed multiples and/or low valuations.


  • A 5-Screen Assessment of Accenture

    Five simple screens can be used to evaluate Accenture PLC (NYSE:ACN). These screens were carefully chosen based on the work of many of the world’s best investors and, in particular, Seth Klarman (Trades, Portfolio), Warren Buffett (Trades, Portfolio), Charlie Munger (Trades, Portfolio) and Peter Lynch.

    These investors have spent years refining and educating others – in books, commentaries and annual reports – on what they’d consider the fundamental principles of investing. These men have hundreds of years of collective experience, they have back-tested countless trading strategies, and they have put their and their families' money on the line.


  • Alcoa Continues Sliding Waiting for an Upside Movement

    Alcoa (NYSE:AA), one of the world's largest producers of aluminum, alumina and engineered lightweight metal products used in a variety of different end markets, has been trading down since February 2015, when the last rally was seen.

    In 11 months, the stock plunged 45%.


  • Sometimes a Bargain Isn't a Bargain - Part 2

    In my previous article (link), I posted the first part of my notes from Seth Klarman's comments and answers during the 18th Graham & Dodd Breakfast held in October 2008. This article contains the second part of my notes:

    5. On insurance:


  • Sometimes a Bargain Isn't a Bargain

    As a low profile legendary value investor, Seth Klarman (Trades, Portfolio) doesn’t appear in the spotlight very often, but when he does, it’s always the best learning opportunity for every value investor. While reading an old issue of OID (the March 2009 issue), I was lucky to bump into some excerpts from Klarman’s comments and answers to the questions during the 19th Annual Graham & Dodd Breakfast held on Oct. 2, 2008. Below is part I of my notes:

    1. On being too early in an investment:


  • 'Alcoa's Transformation Is Paying Off' Presentation

    GuruFocus recently published an article bringing to my attention that a number of well-known investors like Seth Klarman (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio), and Paul Singer (Trades, Portfolio) have recently purchased shares of aluminum company Alcoa (NYSE:AA).

    I found the video below to be extremely helpful in giving a great overview of the company. It's a presentation titled "Alcoa's Transformation is Paying Off," given by CEO Klaus Kleinfeld. The video was published in May 2014. Readers should keep in mind that Alcoa's stock price has dropped from ~$13 per share at the time of the presentation to today's current price of $9.41 per share largely due to the drop in aluminum prices.


  • Seth Klarman Makes 3 Big Investments

    Guru investor Seth Klarman (Trades, Portfolio), who founded the Baupost Group in 1982, continues to run the hedge fund focusing on value investing. It shows how much Klarman respects Benjamin Graham's philosophies and principles in this interview conducted in 2011 by Charlie Rose.

    You can watch the interview here:


  • Insiders Buy Cheniere Energy, Sell Travelport, Sabre

    The All-In-One Screener can be used to find insider buys and sales over the last week by clicking on the Insiders tab and changing the settings for All Insider Buying/All Insider Selling to “$1,000,000+” and duration to "November 2015."

    According to the above filters, the following are the recent buys from company insiders in the past week.


  • Seth Klarman Sells Out of Stake in Alliance One

    Influential investor Seth Klarman (Trades, Portfolio), founder of the $28.5 billion Baupost Group, has exited his position in tobacco company Alliance One International Inc. (NYSE:AOI) he reported in a filing dated Oct. 31, according to GuruFocus Real Time Picks.

    Klarman had held 638,364 shares of the company at last count in the second quarter, a 6.6% stake. Because it is a greater than 5% holding, it is unknown whether he sold it in the third quarter or in October. It previously occupied a 0.26% space in his concentrated portfolio of only 32 stocks, valued at $5.95 billion in total.


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