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Seth Klarman Exits Stake in Ackman's SPAC in 1st Quarter

Baupost Group releases quarterly portfolio

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May 17, 2022
Summary
  • Firm’s top trade is the closure of its Pershing Square Tontine Holdings stake.
  • Also closes position in NortonLifeLock.
  • Firm boosts holdings in Encompass Health, Fiserv and Qorvo.
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Seth Klarman (Trades, Portfolio), manager of the Baupost Group, disclosed in a regulatory filing that his Boston-based firm’s top five trades during the first quarter included the closure of its positions in Pershing Square Tontine Holdings Ltd. (PSTH, Financial) and NortonLifeLock Inc. (NLOK, Financial) and boosts to its holdings of Encompass Health Corp. (EHC, Financial), Fiserv Inc. (FISV, Financial) and Qorvo Inc. (QRVO, Financial).

Klarman received an economics degree at Cornell University and an MBA at Harvard Business School. The author of “Margin of Safety” invests in a wide range of investments, including common stock, distressed debt, liquidations and foreign bonds. Despite this, Klarman also warned that not only should investors focus on absolute returns, but on the risks incurred.

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As of March, Baupost’s $9.27 billion 13F equity portfolio contains 54 stocks, with four new positions and a turnover ratio of 7%. The top two sectors in terms of weight are technology and communication services, representing 40.66% and 38.67% of the equity portfolio.

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Investors should be aware that 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but the reports can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.

Pershing Square Tontine Holdings

Baupost sold all 9,550,504 shares of Pershing Square Tontine Holdings (

PSTH, Financial), trimming 1.86% of its equity portfolio.

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Shares of Pershing Square Tontine Holdings averaged $19.82 during the first quarter. Based on GuruFocus estimates, the firm took a loss of approximately 3.66% on the stock since initially purchasing shares in the third quarter of 2020.

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The blank-check company managed by

Bill Ackman (Trades, Portfolio) said on April 28 that Pershing Square SPARC Holdings, an affilate of Pershing Square Tontine, noted that the withdrawal of the New York Stock Exchange’s proposed listing rules amendment would have allowed the SPARC warrants to be listed on the stock exchange.

NortonLifeLock

The firm sold all 5.78 million shares of NortonLifeLock (

NLOK, Financial), trimming 1.49% of its equity portfolio. Shares averaged $27.49 during the first quarter; the stock is fairly valued based on Tuesday’s price-to-GF Value ratio of 0.92.

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The Tempe, Arizona-based cybersecurity software company has a GF Score of 78 out of 100 based on a GF Value rank of 9 out of 10 and a profitability rank of 7 out of 10 despite financial strength, growth and momentum ranking just between 4 and 6 out of 10.

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Gurus with holdings in NortonLifeLock include

Jim Simons (Trades, Portfolio)’ Renaissance Technologies and Ray Dalio (Trades, Portfolio)’s Bridgewater Associates.

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Encompass Health

Baupost added 2,283,900 shares of Encompass Health (

EHC, Financial), expanding the position by 318.94% and its equity portfolio by 1.75%.

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Shares of Encompass Health averaged $65.64 during the first quarter; the stock is modestly undervalued based on Tuesday’s price-to-GF Value ratio of 0.85.

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Other gurus with holdings in Encompass Health include

Jana Partners (Trades, Portfolio) and Larry Robbins (Trades, Portfolio)’ Glenview Capital Management.

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Fiserv

The firm added 938,391 shares of Fiserv (

FISV, Financial), boosting the position by 30.77% and its equity portfolio by 1.03%.

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Shares of Fiserv averaged $101.22 during the first quarter; the stock is modestly undervalued based on Tuesday’s price-to-GF Value ratio of 0.76.

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The Brookfield, Wisconsin-based payment processing company has a GF Score of 92 out of 100: Even though the stock has a financial strength rank of just 4 out of 10, Fiserv has a GF Value rank of 10 out of 10, a rank of 9 out of 10 for profitability and growth and a momentum rank of 8 out of 10.

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Qorvo

The firm added 699,968 shares of Qorvo (

QRVO, Financial), boosting the position by 11.77% and its equity portfolio by 0.94%.

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Shares of Qorvo averaged $135.49 during the first quarter; the stock is significantly undervalued based on Tuesday’s price-to-GF Value ratio of 0.64.

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The Greensboro, North Carolina-based semiconductor company has a GF Score of 81 out of 100 based on a growth rank of 8 out of 10, a rank of 7 out of 10 for financial strength and profitability and a rank of 4 out of 10 for GF Value and momentum.

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I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure
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