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.
Recently, Seth Klarman is reported to be returning money to investors because of lack of investment opportunities, according to a report at businessinsider.com. The report quoted people who read the Klarman’s letter to investors of November 8, 2010, and said that Baupost Group will return 5% of its capital to investors at the end of the year.
This growth has propelled the firm to an enormous $23 billion in assets. Klarman considers this size too large for the current market environment, in which he finds opportunities scarce.
Klarman has been half-hearted towards the equity market for some time now. GuruFocus tracks his long equity positions. Of the $23 billion asset mentioned above, as of September 30, 2010, only 1.61 billion are invested in US listed stock, up from $1.33 billion as of June 30, 2010. In a Businessweek article in June, Klarman was quoted to have predicted that stocks would provide poor returns for the next 10 years:
At GuruFocus we focus on the stock holdings of Guru Investors. His 3Q10 portfolio information is available, and here are his top holdings:
No. 1: ViaSat Inc. (VSAT, Financial), Weightings: 25.03% - 10,051,492 Shares
ViaSat Inc. designs, produces and markets advanced digital satellite telecommunications and other networking and signal processing equipment. Viasat Inc. has a market cap of $1.7 billion; its shares were traded at around $41.94 with a P/E ratio of 38.2 and P/S ratio of 2.4. Viasat Inc. had an annual average earning growth of 7.1% over the past 5 years.
No. 2: Theravance Inc. (THRX, Financial), Weightings: 15.83% - 13,000,000 Shares
Theravance Inc is focused on the discovery, development and commercialization of small molecule medicines for unmet medical needs across a number of therapeutic areas including respiratory disease, bacterial infections, overactive bladder and gastrointestinal disorders. Theravance Inc. has a market cap of $1.7 billion; its shares were traded at around $22.95 with and P/S ratio of 69.7.
No. 3: News Corp. (NWSA, Financial), Weightings: 15.07% - 19,050,000 Shares
NEWS CORPORATION is a diversified entertainment company with operations in eight industry segments: filmed entertainment; television; cable network programming; direct broadcast satellite television; magazines and inserts; newspapers and information services; book publishing; and other. News Corp. has a market cap of $25.7 billion; its shares were traded at around $14.07 with a P/E ratio of 13.7 and P/S ratio of 0.8. The dividend yield of News Corp. stocks is 1.1%.
No. 4: BreitBurn Energy Parners, L.P. (BBEP, Financial), Weightings: 7.92% - 7,160,500 Shares
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 $1.08 billion; its shares were traded at around $20.28 with a P/E ratio of 14.9 and P/S ratio of 5.2. The dividend yield of Breitburn Energy Partners, L.p. - Common Units Rep stocks is 7.7%.
No. 5: Enzon Inc. (ENZN, Financial), Weightings: 7.07% - 10,382,698 Shares
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 $677.7 million; its shares were traded at around $11.19 with and P/S ratio of 3.7.
No. 6: CapitalSource Inc. (CSE, Financial), Weightings: 6.56% - 20,278,400 Shares
CapitalSource is a specialized commercial finance company offering asset- based, senior, cash flow and mezzanine financing to small and mid-sized borrowers through three focused lending units: Corporate Finance, Healthcare Finance, and Structured Finance. Capitalsource Inc. has a market cap of $2.09 billion; its shares were traded at around $6.47 with and P/S ratio of 2.3. The dividend yield of Capitalsource Inc. stocks is 0.6%.
There must be some super talent in small but promising drug companies in Klarman’s shop as he had two of them as his top holding.
Check out Klarman’s other holdings by clicking on Seth Klarman.
Recently, Seth Klarman is reported to be returning money to investors because of lack of investment opportunities, according to a report at businessinsider.com. The report quoted people who read the Klarman’s letter to investors of November 8, 2010, and said that 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 move 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 – Nobody is perfect. 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).
This growth has propelled the firm to an enormous $23 billion in assets. Klarman considers this size too large for the current market environment, in which he finds opportunities scarce.
Klarman has been half-hearted towards the equity market for some time now. GuruFocus tracks his long equity positions. Of the $23 billion asset mentioned above, as of September 30, 2010, only 1.61 billion are invested in US listed stock, up from $1.33 billion as of June 30, 2010. In a Businessweek article in June, Klarman was quoted to have predicted that stocks would provide poor returns for the next 10 years:
“We are perennially on the bearish side of things. We are not against owning stocks,” Klarman said in the interview. The problem, he said, is that except for a brief time in March 2009, “stocks haven’t been at bargain prices for most of the last two decades.” U.S. stocks reached a 12-year low in March 2009.
At GuruFocus we focus on the stock holdings of Guru Investors. His 3Q10 portfolio information is available, and here are his top holdings:
No. 1: ViaSat Inc. (VSAT, Financial), Weightings: 25.03% - 10,051,492 Shares
ViaSat Inc. designs, produces and markets advanced digital satellite telecommunications and other networking and signal processing equipment. Viasat Inc. has a market cap of $1.7 billion; its shares were traded at around $41.94 with a P/E ratio of 38.2 and P/S ratio of 2.4. Viasat Inc. had an annual average earning growth of 7.1% over the past 5 years.
No. 2: Theravance Inc. (THRX, Financial), Weightings: 15.83% - 13,000,000 Shares
Theravance Inc is focused on the discovery, development and commercialization of small molecule medicines for unmet medical needs across a number of therapeutic areas including respiratory disease, bacterial infections, overactive bladder and gastrointestinal disorders. Theravance Inc. has a market cap of $1.7 billion; its shares were traded at around $22.95 with and P/S ratio of 69.7.
No. 3: News Corp. (NWSA, Financial), Weightings: 15.07% - 19,050,000 Shares
NEWS CORPORATION is a diversified entertainment company with operations in eight industry segments: filmed entertainment; television; cable network programming; direct broadcast satellite television; magazines and inserts; newspapers and information services; book publishing; and other. News Corp. has a market cap of $25.7 billion; its shares were traded at around $14.07 with a P/E ratio of 13.7 and P/S ratio of 0.8. The dividend yield of News Corp. stocks is 1.1%.
No. 4: BreitBurn Energy Parners, L.P. (BBEP, Financial), Weightings: 7.92% - 7,160,500 Shares
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 $1.08 billion; its shares were traded at around $20.28 with a P/E ratio of 14.9 and P/S ratio of 5.2. The dividend yield of Breitburn Energy Partners, L.p. - Common Units Rep stocks is 7.7%.
No. 5: Enzon Inc. (ENZN, Financial), Weightings: 7.07% - 10,382,698 Shares
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 $677.7 million; its shares were traded at around $11.19 with and P/S ratio of 3.7.
No. 6: CapitalSource Inc. (CSE, Financial), Weightings: 6.56% - 20,278,400 Shares
CapitalSource is a specialized commercial finance company offering asset- based, senior, cash flow and mezzanine financing to small and mid-sized borrowers through three focused lending units: Corporate Finance, Healthcare Finance, and Structured Finance. Capitalsource Inc. has a market cap of $2.09 billion; its shares were traded at around $6.47 with and P/S ratio of 2.3. The dividend yield of Capitalsource Inc. stocks is 0.6%.
There must be some super talent in small but promising drug companies in Klarman’s shop as he had two of them as his top holding.
Check out Klarman’s other holdings by clicking on Seth Klarman.
