A king of the value hedge fund scene, Seth Klarman (Trades, Portfolio) picked four stocks for his concentrated portfolio that bets on only 36 stocks as of the end of the third quarter, according to his portfolio update released Monday.
Klarman, well known for his cult classic book “Margin of Safety,” bought shares of: McKesson Corp. (MCK, Financial), AMC Entertainment Holdings Inc. (AMC, Financial), AmerisourceBergen Corp.. (ABC, Financial) and Pioneer Natural Resources Co. (PXD, Financial).
Energy, Technology and Healthcare stocks dominate Klarman’s portfolio, with each taking slightly over 20% of the long positions. His favorite stock is Cheniere Energy Inc. (LNG), a midstream oil and gas company that forms his largest position at 11.7% of the portfolio. Next, he favors Synchrony Financial (SYF), a company Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway (BRK.A)(BRK.B) has also invested in. Klarman placed 11.4% of the portfolio in the stock.
According to Business Insider, Klarman isn’t banking on his long portfolio. The investor has about 40% of Baupost’s assets in cash and will return $2 billion to investors by the end of the year as he awaits better opportunities than the booming stock market offers.
Latest buys
McKesson Corp. (MCK, Financial)
Klarman purchased 500,000 shares of his largest pick, making it 0.96% of the stocks in the long portfolio. Its price for the third quarter averaged around $156 per share.
McKesson Corp. has a market cap of $28.39 billion; its shares were traded around $136.17 with a P/E ratio of 6.65 and P/S ratio of 0.15. The trailing 12-month dividend yield of McKesson Corp stocks is 0.87%. The forward dividend yield of McKesson Corp. stocks is 0.99%. McKesson Corp had an annual average earnings growth of 18% over the past 10 years. GuruFocus rated McKesson Corp the business predictability rank of 4-star.
AMC Entertainment Holdings Inc. (AMC, Financial)
Klarman bought 3,565,361 shares of the company, giving it a 0.66% portfolio weight. The stock traded in the third quarter for roughly $17 on average.
AMC Entertainment Holdings Inc. has a market cap of $1.53 billion; its shares were traded around $11.83 with and P/S ratio of 0.32. The trailing 12-month dividend yield of AMC Entertainment Holdings Inc. stocks is 6.77%. The forward dividend yield of AMC Entertainment Holdings Inc. stocks is 6.87%. AMC Entertainment Holdings Inc. had an annual average earnings growth of 6.10% over the past five years.
AmerisourceBergen Corp. (ABC, Financial)
Klarman bought 188,850 shares of AmerisourceBergen, a 0.2% portfolio weight. The company’s shares traded around $85 each in the third quarter.
AmerisourceBergen Corp. has a market cap of $16.45 billion; its shares were traded around $75.07 with a P/E ratio of 40.58 and P/S ratio of 0.11. The trailing 12-month dividend yield of AmerisourceBergen Corp. stocks is 1.94%. The forward dividend yield of AmerisourceBergen Corp. stocks is 2.02%. AmerisourceBergen Corp. had an annual average earnings growth of 8.90% over the past 10 years. GuruFocus rated AmerisourceBergen Corp. the business predictability rank of 3-star. Top of Form
Pioneer Natural Resources Co. (PXD, Financial)
Klarman bought 28,895 shares of Pioneer Natural Resources, giving it a 0.05% space in the portfolio. The stock’s price averaged around $144 in the third quarter.
Pioneer Natural Resources Co. has a market cap of $26.15 billion; its shares were traded around $153.67 with a P/E ratio of 207.65 and P/S ratio of 4.56. The trailing 12-month dividend yield of Pioneer Natural Resources Co stocks is 0.05%. The forward dividend yield of Pioneer Natural Resources Co. stocks is 0.05%. Pioneer Natural Resources Co. had an annual average earnings growth of 0.8% over the past 10 years.
See Seth Klarman (Trades, Portfolio)’s portfolio here.
