According to the hedge fund's 13F report for the period ended March 31, Klarman and his team bulked up on holdings such as Intel Corp (INTC, Financial) and Liberty Global Inc. (LBTYK, Financial) during the first three months of the year.
Published around 45 days after the end of each calendar quarter, 13F reports give us a snapshot into the public equity holdings of asset managers with more than $100 million of assets under management.
Investors should note that these reports only provide a snapshot of a portfolio at one point in time, and they do not detail credit or cash positions. They also only highlight U.S. equity positions. Furthermore, the reports do not tell us why asset managers decided to build the positions in the first place.
For example, we know Klarman's Baupost manages around $30 billion of assets for clients, but its 13F only details the $12.5 billion of U.S. equity securities.
Still, 13F changes can provide some insight into where investment managers see value in the market at the moment.
SVF Investment Corp
At the end of March, Baupost owned $414,000 of warrants in SVF Investment Corp (SVFAW, Financial). It's unclear why Baupost holds this position. It seems the warrants were attached to the special purpose acquisition company (SPAC) SVF Investment Corp (SVFA, Financial).
It would appear Baupost helped sponsor the SPAC as warrants are issued to SPAC backers as an incentive, but this is only my speculation. In total, the two holdings are worth $10.6 million. That's a minuscule holding compared to Baupost's overall portfolio.
Klarman's favorite value investments
It seems Klarman still likes Intel. His hedge fund started buying the stock in the fourth quarter of last year and quickly built up a substantial position of 18.2 million shares, giving it an 8% portfolio weight.
Baupost has continued to increase the holding. After boosting the position by 28% to 23.2 million shares, it's now the most prominent U.S. equity position in Baupost's portfolio with an 11.9% portfolio weight.
Baupost also added to its holding of Qorvo (QRVO, Financial), which provides innovative and high-performance RF solutions for advanced wireless devices, defense radar and communications. Baupost boosted its position in this stock by 18%, making it the fourth-largest position in the portfolio with a 7.6% weight.
Another significant addition was Willis Towers Watson (WLTW, Financial). Klarman and his team acquired 2.5 million shares in this business services company during the first quarter of 2021. The $572 million holding is now the seventh-largest U.S. equity holding after Google's parent company, Alphabet (GOOG, Financial). What's interesting about this position is the fact that the hedge fund built such a large holding so quickly. This only seems to happen when Klarman is convinced the business is deeply undervalued.
We saw the same happen with Intel last year. Even with Alphabet, Baupost's position in the company started with just a 3.8% weighting in the portfolio before moving up to 4.8%. Baupost increased its holding in Alphabet by 265% during the first quarter.
Disclosure: The author owns no share mentioned.
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