Seth Klarman (Trades, Portfolio), portfolio manager of the Baupost Group, disclosed this week that his top five trades for the first quarter included the trimming of his eBay Inc. (EBAY, Financial) and Fox Corp. (FOXA, Financial) holdings and the closure of his Marathon Petroleum (MPC, Financial) position. With the proceeds, Klarman established a position in Wills Towers Watson PLC (WLTW, Financial) and boosted his stake in Alphabet Inc. (GOOG, Financial)(GOOGL, Financial).
Klarman received an economics degree at Cornell University and an MBA at Harvard University. The author of "Margin of Safety" invests in a wide range of securities, including common stock, distressed debt, liquidations, foreign equities and bonds. Despite this, the Baupost manager occasionally stays in cash when investment opportunities are scarce, further warning that investing is more than just producing absolute returns: Investing also includes studying the risks involved in producing absolute returns.
As of March 31, Baupost manages over $32 billion in total assets. The firm's $12.53 billion equity portfolio contains 58 stocks, with 18 new positions and a turnover ratio of 21%. The top four sectors in terms of weight are technology, communication services, financial services and consumer cyclical, representing 32.82%, 31.31%, 11.55% and 8.96% of the equity portfolio.
EBay
Klarman sold 12,790,800 shares of eBay (EBAY, Financial), slashing 41.11% of the position and 5.95% of his equity portfolio. Shares averaged $58.07 during the first quarter; the stock is fairly valued based on Monday's price-to-GF Value ratio of 0.92.
GuruFocus ranks the San Jose, California-based e-commerce company's financial strength 5 out of 10: Although the company has a strong Altman Z-score of 4.84 and a solid Piotroski F-score of 5, interest coverage and debt-to-equity ratios underperform more than 60% of global competitors.
Other gurus with holdings in eBay include Bill Nygren (Trades, Portfolio), Jim Simons (Trades, Portfolio)' Renaissance Technologies and Pioneer Investments (Trades, Portfolio).
Fox
Klarman sold 14,576,132 Class A shares of Fox (FOXA, Financial), axing 65.7% of the position and 3.93% of the equity portfolio. Shares averaged $34.96 during the first quarter.
GuruFocus ranks the New York-based diversified media company's financial strength 5 out of 10 on the back of a moderately weak Altman Z-score of 2.5 and interest coverage and debt ratios that underperform more than 56% of global competitors.
Other gurus with holdings in Fox include Dodge & Cox, Yacktman Asset Management (Trades, Portfolio) and the Yacktman Fund (Trades, Portfolio).
Marathon Petroleum
Klarman sold 7,689,721 shares of Marathon Petroleum (MPC, Financial), drilling out 2.94% of the equity portfolio. Shares averaged $50.51 during the first quarter; the stock is significantly overvalued based on Monday's price-to-GF Value ratio of 1.60.
GuruFocus ranks the Findlay, Ohio-based energy company's financial strength 4 out of 10 on several warning signs, which include a weak Altman Z-score of 1.53 and interest coverage and debt ratios that underperform more than 82% of global competitors.
Willis Towers Watson
Klarman purchased 2.5 million shares of Willis Towers Watson (WLTW, Financial), giving the position 4.57% weight in his equity portfolio. Shares averaged $218.07 during the first quarter; the stock is modestly overvalued based on Monday's price-to-GF Value ratio of 1.16.
GuruFocus ranks the U.K.-based insurance company's profitability 6 out of 10 on the back of profit margins and returns outperforming over 68% of global competitors.
Alphabet
Klarman purchased 211,350 Class C shares of Alphabet (GOOG, Financial), expanding the position by 265.58% and his equity portfolio by 3.49%. Shares averaged $1,986.11 during the first quarter; the stock is modestly overvalued based on Monday's price-to-GF Value ratio of 1.298.
GuruFocus ranks the Mountain View, California-based online search giant's profitability 9 out of 10 on several positive investing signs, which include a five-star business predictability rank and profit margins and returns outperforming over 82% of global competitors.
Disclosure: No positions.
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