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Seth Klarman’s Top Buys: PDL BioPharma Inc., CapitalSource Inc., News Corp., Domtar Corp., Facet Biotech Corporation

Seth Klarman 1Q09 Portfolio Review -- Part 2: Top Buys

June 08, 2009 | About:
Summary In 1Q09, Seth Klarman continues to buy into biotech companies and doubled down on some of his positions: PDL BioPharma Inc. (NASDAQ:PDLI), CapitalSource Inc. (CSE), News Corp. (NWS-A), Domtar Corp. (NYSE:UFS), FACET BIOTECH CORPORATION (FACT)

No. 1: PDL BioPharma Inc. (NASDAQ:PDLI) Added 1.2 million shares

Protein Design Labs Inc. is a biopharmaceutical company focused on the research development and commercialization of novel therapies for inflammation and autoimmune diseases acute cardiac conditions and cancer. PDL BioPharma Inc. has a market cap of $887.6 million; its shares were traded at around $7.43 with a P/E ratio of 7.4 and P/S ratio of 3. The dividend yield of PDL BioPharma Inc. stocks is 13.5%.

Klarman bought over added over 1.2 million shares in 1Q09.

No. 2: CapitalSource Inc. (CSE), Added 26.4 million shares

CapitalSource is a specialized commercial finance company offering asset- based senior cash flow and mezzanine financing to small and mid-sized borrowers through three focused lending units: Corporate Finance, Healthcare Finance, and Structured Finance. CapitalSource Inc. has a market cap of $1.32 billion; its shares were traded at around $4.37 with a P/E ratio of 7.2 and P/S ratio of 1.1. The dividend yield of CapitalSource Inc. stocks is 0.9%. CapitalSource Inc. had an annual average earning growth of 44.3% over the past 5 years.

Klarman added about 26.4 million shares of CSE in 1Q09.

No. 3: News Corp. (NWS-A), Added 10.6 million shares

News Corperation is a diversified entertainment company with operations in eight industry segments: filmed entertainment; television; cable network programming; direct broadcast satellite television; magazines and inserts; newspapers and information services; book publishing; and other. News Corp. has a market cap of $15.45 billion; its shares were traded at around $0 with a P/E ratio of 6.86 and P/S ratio of 0.47. The dividend yield of News Corp. stocks is 1.41%. News Corp. had an annual average earning growth of 17.2% over the past 5 years.

Klarman bought about 10.6 million shares in 1Q09.

No. 4: Domtar Corp. (NYSE:UFS), Add 7.1 million Shares

Domtar is a major North American manufacturer of pulp and forest products fine papers and packaging. Domtar Corp. has a market cap of $738.2 million; its shares were traded at around $1.49 with a P/E ratio of 29.8 and P/S ratio of 0.1.

Klarman started a position in UFS in 1Q07 when he held 6.25 million shares. He has built up his stake in the company since then and in 1Q09 he bought another 7.1 million shares, bringing the total to 40.6 million shares. During the time, UFS really took a beating, declined from about $10 in 1Q07 to less than a dollar as of March 31, 2009.

Will Klarman be made whole on this one?

No. 5: FACET BIOTECH CORPORATION (FACT), Added 1.6 million shares

Facet Biotech Corporation offers biotechnology research services for drug and pharmaceutical products development. It is dedicated to advancing its pipeline of four clinical-stage products and leveraging its research and development capabilities to identify and develop new drugs. FACET BIOTECH CORPORATION has a market cap of $257.8 million; its shares were traded at around $10.5 with and P/S ratio of 14.1.

Klarman bought 2.8 million of FACT in 4Q08 and another 1.6 million shares in 1Q09.


During the first quarter, Seth Klarman continues to show is competence in finding values among the biotech companies. He also doubled down on a number of his existing stocks, companies he bought earlier but are selling at much lower price. These companies include NWS-A, CSE, and UFE

Rating: 3.8/5 (10 votes)


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