Harvard Panel with Seth Klarman from October 2008.

Seth Klarman is a value investor and Portfolio Manager of the investment partnership The Baupost Group. Founded in 1983, The Baupost Group now manages $20 billion, and has averaged returns of nearly 20% annually since their inception. Seth Klarman is the author of the book "Margin of Safety" which sells for over $1000. Mr. Klarman attended Cornell University where he received a degree in economics, and later attended Harvard University where he earned an M.B.A.

Overview

A confluence of factors led to the current economic crisis, particularly the desire to achieve unattainable returns and the perception that the world was without risk. These factors led to high amounts of leverage and lack of discipline.

There will be many consequences of this crisis. The panel expects a very painful recession, potentially high inflation, and increased government regulation.

Yet, even amid these challenging circumstances, attractive investment opportunities exist. Prices are lower and private equity firms continue to have substantial sums available to invest. Patient, disciplined investors can still fare well.

Context

The panel of experienced investors discussed the U.S. financial crisis and its causes, as well as potential investment opportunities.

Paul Finnegan, MBA 1982, Co-CEO, Madison Dearborn Partners Inc.

Yoshi Hori, MBA 1991, CEO, Globis Management School

Seth Klarman, MBA 1982President, The Baupost Group

Mark Nunnelly, MBA 1984 Managing Director, Bain Capital Inc.

Key points:

– A decline in HBS graduates flocking to Wall Street. Seth Klarman said that the entire sequence of economic events that had been taking place, including the number of HBS grads flocking to Wall Street, "has to end."

“Everyone was trying too hard to earn returns and didn’t take risk into account.”

Seth A. Klarman

Link to video: http://www.hbs.edu/centennial/businesssummit/asset-management/active-management-private-equity-venture-capital-and-hedge-funds.html#

H/T to Joe of http://www.valueinvestingworld.com/ for the find.

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