This is the portfolio update of hedge fund Baupost Group, which is run by legendary value investor Seth Klarman.
For starters: Klarman's firm, Baupost gained an average of 17 percent annually in the 10 years ended in December 2009, a period in which the Standard & Poor’s 500 Index fell 1 percent a year. The hedge fund has returned 19 percent a year since it was started, even as it held more than 40 percent of its assets in cash at times.
Today, Seth Klarman is returning money to investors because of lack of investment opportunities, according to a report at businessinsider.com. The report quotes people who read the Klarman’s letter to investors of November 8, 2010, Baupost Group will return 5% of its capital to investors at the end of the year.
"Today, Baupost's opportunity set is smaller than it has been in some years," Klarman wrote, "while our cash balances have grown..."
While it is unusual for an investment manager who makes fees off the asset under management to return money to investors, Klarman’s stand is hardly a surprise to people who follow him. And, when times are good, Klarman does not mind opening door to new investors. For instance, in February 2008, when Baupost accepted new investors after being closed for eight years. With the money raised, Klarman bought distressed corporate and mortgage debt.His fund lost 12 percent that year, its second annual decline since inception, because it bought some of the debt too early, Klarman said. Then, less than two years later, Baupost has generated a monstrous $6.5 billion in net investment profits from January 1, 2009 to September 2010 ("net" of an estimated $2 billion of performance and management fees).
Seth Klarman buys Alere Inc., Lstza, Regeneron Pharmaceuticals Inc., Viasat Inc., Enzon Inc., sells Domtar Corp., Breitburn Energy Partners, L.p. - Common Units Rep, Solar Capital Ltd. during the 3-months ended 09/30/2010, according to the most recent filings of his investment company, The Baupost Group. As of 09/30/2010, The Baupost Group owns 18 stocks with a total value of $1.7 billion. These are the details of the buys and sells.
For the details of Seth Klarman's stock buys and sells, go to http://www.gurufocus.com/StockBuy.php?GuruName=Seth+Klarman
This is the sector weightings of his portfolio:
These are the top 5 holdings of Seth Klarman
Added: Lstza (LSTZA, Financial)
Seth Klarman added to his holdings in Lstza by 136.85%. The impact to his portfolio due to this purchase was 2.27%. His holdings were 1,000,000 shares as of 09/30/2010.
Liberty Starz Group is a significant operating subsidiary and also a principal reportable segment of Liberty Media Corporation which focuses primarily on video programming, communications businesses, and the direct-to-home satellite distribution business. Lstza has a market cap of $3.01 billion; its shares were traded at around $61.58 with a P/E ratio of 18 and P/S ratio of 2.5.
Added: Viasat Inc. (VSAT, Financial)
Seth Klarman added to his holdings in Viasat Inc. by 0.79%. The impact to his portfolio due to this purchase was 0.2%. His holdings were 10,051,492 shares as of 09/30/2010.
ViaSat Inc. designs, produces and markets advanced digital satellitetelecommunications and other networking and signal processing equipment. Viasat Inc. has a market cap of $1.66 billion; its shares were traded at around $40.96 with a P/E ratio of 37.2 and P/S ratio of 2.4. Viasat Inc. had an annual average earning growth of 7.1% over the past 5 years.
Added: Enzon Inc. (ENZN)
Seth Klarman added to his holdings in Enzon Inc. by 2.03%. The impact to his portfolio due to this purchase was 0.14%. His holdings were 10,382,698 shares as of 09/30/2010.
Enzon Pharmaceuticals, Inc. is a biopharmaceutical company dedicated to the development and commercialization of therapeutics to treat patients with cancer and adjacent diseases. Enzon Inc. has a market cap of $650.5 million; its shares were traded at around $10.74 with and P/S ratio of 3.5.
New Purchase: Alere Inc. (ALR, Financial)
Seth Klarman initiated holdings in Alere Inc.. The impact to his portfolio due to this purchase was 2.81%. His holdings were 1,500,000 shares as of 09/30/2010.
Alere Inc., formerly known as Inverness Medical Innovations, Inc. Alere Inc. has a market cap of $2.48 billion; its shares were traded at around $29.29 with a P/E ratio of 12.7 and P/S ratio of 1.3.
New Purchase: Regeneron Pharmaceuticals Inc. (REGN, Financial)
Seth Klarman initiated holdings in Regeneron Pharmaceuticals Inc.. The impact to his portfolio due to this purchase was 1.66%. His holdings were 1,000,000 shares as of 09/30/2010.
Regeneron Pharmaceuticals Inc. is a biopharmaceutical company that discovers, develops, and intends to commercialize therapeutic drugs for thetreatment of serious medical conditions. Regeneron Pharmaceuticals Inc. has a market cap of $2.02 billion; its shares were traded at around $24.49 with and P/S ratio of 5.3.
Reduced: Domtar Corp. (UFS, Financial)
Seth Klarman reduced to his holdings in Domtar Corp. by 56.16%. The impact to his portfolio due to this sale was -4.01%. Seth Klarman still held 800,000 shares as of 09/30/2010.
Domtar is a major North American manufacturer of pulp and forest products, fine papers and packaging that fosters sustainable development through the rigorous application of its integrated forest management policy. Domtar Corp. has a market cap of $3.31 billion; its shares were traded at around $78.87 with a P/E ratio of 8 and P/S ratio of 0.6. The dividend yield of Domtar Corp. stocks is 1.3%. Domtar Corp. had an annual average earning growth of 34.7% over the past 5 years.
Reduced: Breitburn Energy Partners, L.p. - Common Units Rep (BBEP, Financial)
Seth Klarman reduced to his holdings in Breitburn Energy Partners, L.p. - Common Units Rep by 13.63%. The impact to his portfolio due to this sale was -1.25%. Seth Klarman still held 7,160,500 shares as of 09/30/2010.
BreitBurn Energy Partners L.P. is an independent oil and gas limited partnership, recently formed by a subsidiary of Provident Energy Trust, focused on the acquisition, exploitation and development of oil and gas properties. Breitburn Energy Partners, L.p. - Common Units Rep has a market cap of $1.07 billion; its shares were traded at around $20 with a P/E ratio of 14.7 and P/S ratio of 5.2. The dividend yield of Breitburn Energy Partners, L.p. - Common Units Rep stocks is 7.8%.
Reduced: Solar Capital Ltd. (SLRC, Financial)
Seth Klarman reduced to his holdings in Solar Capital Ltd. by 12.17%. The impact to his portfolio due to this sale was -0.32%. Seth Klarman still held 1,766,300 shares as of 09/30/2010.
Solar Capital Ltd. is a closed-end investment company that invests primarily in leveraged companies, including middle market companies, in the form of senior secured loans, mezzanine loans, and equity securities. Solar Capital Ltd. has a market cap of $773.5 million; its shares were traded at around $23.32 with a P/E ratio of 11.7 and P/S ratio of 7.1. The dividend yield of Solar Capital Ltd. stocks is 10.3%.
For starters: Klarman's firm, Baupost gained an average of 17 percent annually in the 10 years ended in December 2009, a period in which the Standard & Poor’s 500 Index fell 1 percent a year. The hedge fund has returned 19 percent a year since it was started, even as it held more than 40 percent of its assets in cash at times.
Today, Seth Klarman is returning money to investors because of lack of investment opportunities, according to a report at businessinsider.com. The report quotes people who read the Klarman’s letter to investors of November 8, 2010, Baupost Group will return 5% of its capital to investors at the end of the year.
"Today, Baupost's opportunity set is smaller than it has been in some years," Klarman wrote, "while our cash balances have grown..."
While it is unusual for an investment manager who makes fees off the asset under management to return money to investors, Klarman’s stand is hardly a surprise to people who follow him. And, when times are good, Klarman does not mind opening door to new investors. For instance, in February 2008, when Baupost accepted new investors after being closed for eight years. With the money raised, Klarman bought distressed corporate and mortgage debt.His fund lost 12 percent that year, its second annual decline since inception, because it bought some of the debt too early, Klarman said. Then, less than two years later, Baupost has generated a monstrous $6.5 billion in net investment profits from January 1, 2009 to September 2010 ("net" of an estimated $2 billion of performance and management fees).
Seth Klarman buys Alere Inc., Lstza, Regeneron Pharmaceuticals Inc., Viasat Inc., Enzon Inc., sells Domtar Corp., Breitburn Energy Partners, L.p. - Common Units Rep, Solar Capital Ltd. during the 3-months ended 09/30/2010, according to the most recent filings of his investment company, The Baupost Group. As of 09/30/2010, The Baupost Group owns 18 stocks with a total value of $1.7 billion. These are the details of the buys and sells.
For the details of Seth Klarman's stock buys and sells, go to http://www.gurufocus.com/StockBuy.php?GuruName=Seth+Klarman
This is the sector weightings of his portfolio:
| Health Care | 25.5% |
| Technology | 25% |
| Consumer Services | 15.7% |
| Oil & Gas | 8.3% |
| Financials | 6.6% |
| Consumer Goods | 3.7% |
| Basic Materials | 3.1% |
| Industrials | 0.4% |
These are the top 5 holdings of Seth Klarman
- ViaSat Inc. (VSAT) - 10,051,492 shares, 25.03% of the total portfolio. Shares added by 0.79%
- Theravance Inc. (THRX) - 13,000,000 shares, 15.83% of the total portfolio.
- News Corp. (NWSA) - 19,050,000 shares, 15.07% of the total portfolio.
- BREITBURN ENERGY PARTNERS, L.P. - COMMON UNITS REP (BBEP) - 7,160,500 shares, 7.92% of the total portfolio. Shares reduced by 13.63%
- Enzon Inc. (ENZN) - 10,382,698 shares, 7.07% of the total portfolio. Shares added by 2.03%
Added: Lstza (LSTZA, Financial)
Seth Klarman added to his holdings in Lstza by 136.85%. The impact to his portfolio due to this purchase was 2.27%. His holdings were 1,000,000 shares as of 09/30/2010.
Liberty Starz Group is a significant operating subsidiary and also a principal reportable segment of Liberty Media Corporation which focuses primarily on video programming, communications businesses, and the direct-to-home satellite distribution business. Lstza has a market cap of $3.01 billion; its shares were traded at around $61.58 with a P/E ratio of 18 and P/S ratio of 2.5.
Added: Viasat Inc. (VSAT, Financial)
Seth Klarman added to his holdings in Viasat Inc. by 0.79%. The impact to his portfolio due to this purchase was 0.2%. His holdings were 10,051,492 shares as of 09/30/2010.
ViaSat Inc. designs, produces and markets advanced digital satellitetelecommunications and other networking and signal processing equipment. Viasat Inc. has a market cap of $1.66 billion; its shares were traded at around $40.96 with a P/E ratio of 37.2 and P/S ratio of 2.4. Viasat Inc. had an annual average earning growth of 7.1% over the past 5 years.
Added: Enzon Inc. (ENZN)
Seth Klarman added to his holdings in Enzon Inc. by 2.03%. The impact to his portfolio due to this purchase was 0.14%. His holdings were 10,382,698 shares as of 09/30/2010.
Enzon Pharmaceuticals, Inc. is a biopharmaceutical company dedicated to the development and commercialization of therapeutics to treat patients with cancer and adjacent diseases. Enzon Inc. has a market cap of $650.5 million; its shares were traded at around $10.74 with and P/S ratio of 3.5.
New Purchase: Alere Inc. (ALR, Financial)
Seth Klarman initiated holdings in Alere Inc.. The impact to his portfolio due to this purchase was 2.81%. His holdings were 1,500,000 shares as of 09/30/2010.
Alere Inc., formerly known as Inverness Medical Innovations, Inc. Alere Inc. has a market cap of $2.48 billion; its shares were traded at around $29.29 with a P/E ratio of 12.7 and P/S ratio of 1.3.
New Purchase: Regeneron Pharmaceuticals Inc. (REGN, Financial)
Seth Klarman initiated holdings in Regeneron Pharmaceuticals Inc.. The impact to his portfolio due to this purchase was 1.66%. His holdings were 1,000,000 shares as of 09/30/2010.
Regeneron Pharmaceuticals Inc. is a biopharmaceutical company that discovers, develops, and intends to commercialize therapeutic drugs for thetreatment of serious medical conditions. Regeneron Pharmaceuticals Inc. has a market cap of $2.02 billion; its shares were traded at around $24.49 with and P/S ratio of 5.3.
Reduced: Domtar Corp. (UFS, Financial)
Seth Klarman reduced to his holdings in Domtar Corp. by 56.16%. The impact to his portfolio due to this sale was -4.01%. Seth Klarman still held 800,000 shares as of 09/30/2010.
Domtar is a major North American manufacturer of pulp and forest products, fine papers and packaging that fosters sustainable development through the rigorous application of its integrated forest management policy. Domtar Corp. has a market cap of $3.31 billion; its shares were traded at around $78.87 with a P/E ratio of 8 and P/S ratio of 0.6. The dividend yield of Domtar Corp. stocks is 1.3%. Domtar Corp. had an annual average earning growth of 34.7% over the past 5 years.
Reduced: Breitburn Energy Partners, L.p. - Common Units Rep (BBEP, Financial)
Seth Klarman reduced to his holdings in Breitburn Energy Partners, L.p. - Common Units Rep by 13.63%. The impact to his portfolio due to this sale was -1.25%. Seth Klarman still held 7,160,500 shares as of 09/30/2010.
BreitBurn Energy Partners L.P. is an independent oil and gas limited partnership, recently formed by a subsidiary of Provident Energy Trust, focused on the acquisition, exploitation and development of oil and gas properties. Breitburn Energy Partners, L.p. - Common Units Rep has a market cap of $1.07 billion; its shares were traded at around $20 with a P/E ratio of 14.7 and P/S ratio of 5.2. The dividend yield of Breitburn Energy Partners, L.p. - Common Units Rep stocks is 7.8%.
Reduced: Solar Capital Ltd. (SLRC, Financial)
Seth Klarman reduced to his holdings in Solar Capital Ltd. by 12.17%. The impact to his portfolio due to this sale was -0.32%. Seth Klarman still held 1,766,300 shares as of 09/30/2010.
Solar Capital Ltd. is a closed-end investment company that invests primarily in leveraged companies, including middle market companies, in the form of senior secured loans, mezzanine loans, and equity securities. Solar Capital Ltd. has a market cap of $773.5 million; its shares were traded at around $23.32 with a P/E ratio of 11.7 and P/S ratio of 7.1. The dividend yield of Solar Capital Ltd. stocks is 10.3%.
