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James Li
James Li
Articles (1251)  | Author's Website |

Seth Klarman’s 5 Largest Holdings as of the March Quarter

Baupost makes eBay its top holding following 60% position increase

According to current portfolio statistics, the largest five holdings in Seth Klarman (Trades, Portfolio)’s equity portfolio as of the March quarter are eBay Inc. (NASDAQ:EBAY), Liberty Global PLC (NASDAQ:LBTYK), Fox Corp. (NASDAQ:FOXA), Viasat Inc. (NASDAQ:VSAT) and Alphabet Inc. (NASDAQ:GOOGL)(NASDAQ:GOOG).

A Harvard University MBA graduate, Klarman founded the Boston-based firm in 1983. As of March, Baupost manages approximately $30.2 billion in assets according to its latest ADV form.

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The author of “Margin of Safety” invests in a wide range of securities, including stocks, distressed debt, liquidations, foreign equities and bonds. Despite the wide range of investments, Klarman does not mind staying in cash during times when investing opportunities are scarce. The Baupost leader warns that investing is not only about making absolute returns, but also about paying attention to the risks of producing absolute returns.

Klarman’s $6.75 billion equity portfolio contains 32 stocks as of the quarter's end, with eight new positions and a quarterly turnover of 25%. Among the market sectors, the communication services sector has the highest equity portfolio weight of 43.30%, up from the December 2019 quarter's weight of 40.48%. The next three largest sectors are technology, consumer cyclical and health care, with weights of 16.12%, 14.49% and 13.33%.

Top holding: eBay

Klarman owns 32,086,000 shares of eBay as of the March quarter, up approximately 12 million shares or 60% from fourth-quarter 2019. Shares of the San Jose, California-based online retail company averaged $34.92 during the quarter.

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The transaction increased eBay’s weight in the equity portfolio from the December 2019 value of 8.39% to 14.30%, elevating eBay to the largest holding in the portfolio. The following video further discusses Klarman’s portfolio, including a brief overview of eBay’s summary page.

As highlighted in the video, GuruFocus’ summary page includes a wide range of key financial data on the company, including financial strength data, profitability data, valuation data and much more. The financial strength rank considers the strength of the balance sheet based on ratios, including the interest coverage ratio, the Altman Z-score and the debt-to-equity ratio. Likewise, the profitability rank considers items like profit margins, returns on assets and equity and three-year revenue and earnings growth rates. Figure 1 illustrates a snapshot of eBay’s summary page.

Figure 1

As Figure 1 illustrates, GuruFocus ranks eBay’s financial strength 5 out of 10 and profitability 8 out of 10. Although the company has a strong Altman Z-score of 3.72, equity-to-asset and debt-to-equity ratios are underperforming over 90% of global competitors, suggesting high leverage. On the other hand, profit margins and returns are outperforming over 96% of global online retail companies.

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Other gurus with large holdings include Jim Simons (Trades, Portfolio)’ Renaissance Technologies and Paul Singer (Trades, Portfolio)’s Elliott Management.

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Liberty Global

Klarman owns 53,705,407 shares of Liberty Global as of the quarter end, up a slight 2.5% from December 2019. The Baupost leader dedicated 12.51% of the equity portfolio to the holding.

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The U.K.-based company operates cable networks around several European countries. GuruFocus ranks Liberty Global’s financial strength 3 out of 10 on the back of interest coverage and debt ratios underperforming over 89% of global competitors. Other warning signs include contracting revenue and profit margins, suggesting weakening profitability.

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Fox

Klarman owns 27,322,720 Class A shares of Fox, dedicating 9.57% of the equity portfolio to the stake.

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The New York-based company operates TV networks, including Fox News, Fox Sports, Fox Business and the FOX broadcasting channel. GuruFocus ranks the company’s financial strength 5 out of 10 on the heels of debt ratios underperforming over 60% of global competitors. Despite this, profit margins are outperforming over 80% of global broadcasting companies, suggesting good profitability.

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Viasat

Klarman owns 13,732,068 shares of Viasat, giving the position 7.31% equity portfolio weight.

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The Carlsbad, California-based company provides bandwidth technologies and services through three business segments: satellite services, commercial networks and government systems. GuruFocus ranks the company’s financial strength 4 out of 10 on the back of interest coverage and debt ratios underperforming over 80% of global competitors.

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Alphabet (Google)

Klarman purchased 300,500 Class C shares of Alphabet during the quarter, giving the position 5.18% weight in the equity portfolio.

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GuruFocus ranks the Mountain View, California-based online media giant’s financial strength and profitability 9 out of 10 on the back of several positive investing signs, which include a strong Altman Z-score of 10, a four-star business predictability rank and a net profit margin that outperforms 81.24% of global competitors.

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Disclosure: The author has no positions in the stocks mentioned. The stocks discussed in this article reflect Klarman’s holdings as of the March-quarter filing and exclude any trades or portfolio hedges Baupost might have done during April and May.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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