GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Seth Klarman's Baupost Loses $150 Million on Junior Gold Miners

July 12, 2013 | About:
CanadianValue

Canadian Value

117 followers
There is no more beaten down sector of the market than junior resource miners, especially those listed in Canada.

It appears as though the great Klarman is among those taking a beating:

seth-klarman-baupost-2-265x300.jpg

In October, Marcel “Mac” DeGuire became president and chief operating officer of Guyana Goldfields, an exploration-stage company listed on the Toronto Stock Exchange that has been losing money trying to develop gold mines in South America for years. Within a few weeks DeGuire was helping to convince investors to buy into a Guyana Goldfields financing for C$3.40 a share, a significant fund raise for the company of some $100 million that closed in February. Eleven days later, however, DeGuire resigned from Guyana Goldfields, citing “personal reasons.” The stock has plunged by more than 60% in 2013 and is now changing hands for C$1.24.

It might be surprising for some market watchers to learn that Guyana Goldfields’ biggest shareholder is the Baupost Group, the massive Boston hedge fund firm run by Seth Klarman. Baupost owns 19.7% of Guyana Goldfields, a stake recently worth about $30 million. A billionaire hedge fund genius, Klarman is one of the most revered money managers of his generation, a value investor who likes to steer clear of controversy and public attention, keep his head down and concentrate on his investments. His track record and reputation are stellar, which makes it a little strange that Baupost has gotten behind Guyana Goldfields and some other long shot, some might even say iffy, gold mining ventures with penny stocks and high executive pay. These companies often make sure to point out that Baupost is a major investor in their shares in investment presentations.

Shares of gold mining companies have been hammered this year as the price of gold has tumbled. Most gold mining companies are facing a serious cash crunch as the economics of their industry get upended. The fall of gold and gold miners has publicly embarrassed investors who made big bets on the sector, like billionaire John Paulson, who has been so frustrated with the shadow his decimated and relatively small gold hedge fund has cast on the rest of his hedge fund operation that he has stopped sending out his gold fund’s financial returns to investors in his other funds. Klarman’s gold mining investments have also been clobbered, losing between $150 million and $200 million in value in 2013. That’s hardly an insurmountable loss for Klarman since Baupost manages $28 billion and, unlike Paulson, Klarman does not separate out his gold-related investments in a separate fund. Still, Klarman’s gold mining losses, which have not received any public attention this year, are among the biggest to have hit a major U.S. hedge fund this year.

Continue reading here.

About the author:

Canadian Value
http://valueinvestorcanada.blogspot.com/

Rating: 3.5/5 (4 votes)

Comments

LwC
LwC - 1 year ago
FORBES® Website Terms of Service

http://www.forbes.com/fdc/terms.html

The copying, rearrangement, broadcast, rewriting for broadcast or publication, redistribution, modification, use or publication by you in any medium, directly or indirectly, of any such matters or any part of the Website, including the removal or alteration of advertising, except for limited rights of use granted hereunder, is strictly prohibited...

You may use the Content online and solely for your personal, non-commercial use, and you may download or print a single copy of any portion of the Content for your personal, non-commercial use, provided you do not remove any trademark, copyright or other notice contained in such Content…

You may not, for example, republish the Content on any Internet, Intranet or Extranet site or incorporate the Content in any database, compilation, archive or cache or store the Content in electronic form on your computer or mobile device unless otherwise expressly permitted by Forbes. You may not distribute any of the Content to others, whether or not for payment or other consideration, and you may not modify, copy, frame, reproduce, sell, publish, transmit, display or otherwise use any portion of the Content without securing the prior written consent of Forbes.

superguru
Superguru - 1 year ago
Seth is not really a very good stock picker, just based on what I have been seeing for last 5 years on Gurufocus.

Why do you think he is sticking with Gold Miners?

Conventional wisdom seems to be - If you can buy GLD so easily why buy miners?

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK