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Holly LaFon
Holly LaFon
Articles (8982)  | Author's Website |

Seth Klarman Buys PG&E, Doubles Down on Pioneer Natural Resources

Also sells Express Scripts

Seth Klarman (Trades, Portfolio), a widely followed value investor and author, disclosed Monday that he purchased one stock, PG&E Corp. (NYSE:PCG), and doubled his stake in Pioneer Natural Resources Co. (NYSE:PXD) in the first quarter.

Klarman’s portfolio at his firm, Baupost Group, lists 31 stocks with an aggregate value of $10.3 billion and quarter-over-quarter turnover of 9%. The most represented sectors are energy at 25% of stocks, health care at 22.5% and consumer cyclical at 21.6%.

As discussed in his hard-to-find book, “Margin of Safety,” Klarman buys stocks trading at large discounts to his estimate of their intrinsic value. The strategy has earned him annual returns of 16.4% since its founding in 1982 through 2015, CNBC reported. He dismissed the cryptocurrency trend in his fourth-quarter letter, CNBC also said.

The portfolio of long stocks composes just one aspect of Klarman’s $32 billion hedge fund. As he said in a 2011 letter:

"But in a field where the vast majority of our competitors spend their time looking exclusively at equities to buy or sell short, we are truly fortunate to have a broad mandate and stable, long-term oriented client base that allows us to emphasize in our portfolio more complex, less liquid, and less widely analyzed investments, such as distressed debt--and the ability to concentrate our capital in the areas of greatest opportunity, which inevitably evolve over time."

First-quarter 2018 buys

PG&E Corp. (NYSE:PCG)

Klarman purchased 3,149,972 shares of PG&E Corp., giving it 1.35% portfolio space. The stock’s first-quarter share price averaged $42.

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PG&E Corp. has a market cap of $22.33 billion; its shares were traded around $43.23 Monday with a P/E ratio of 14.74 and P/S ratio of 1.32. The trailing 12-month dividend yield of PG&E Corp. stocks is 3.57%. PG&E Corp. had an annual average earnings growth of 3.50% over the past five years.

Pioneer Natural Resources Co. (NYSE:PXD)

Klarman purchased 2 million shares of Pioneer Natural Resources, increasing the position by 100% to 4 million shares. The holding occupies 6.68% of the portfolio. The stock had a first-quarter average trading price of $176.

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Pioneer Natural Resources Co. has a market cap of $34.36 billion; its shares were traded around $201.62 with a P/E ratio of 32.84 and P/S ratio of 5.42. The trailing 12-month dividend yield of Pioneer Natural Resources Co. stocks is 0.10%. The forward dividend yield of Pioneer Natural Resources Co. stocks is 0.16%. Pioneer Natural Resources Co. had an annual average earnings growth of 1.40% over the past 10 years.

Novagold Resources Inc. (NG)

Klarman purchased 2,724,145 shares of Novagold Resources, boosting the stake 25.4% to 13,467,145 shares. The holding represented 0.57% of the portfolio. The stock price averaged $4 per share for the quarter.

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Novagold Resources Inc. has a market cap of $1.56 billion; its shares were traded around $4.92 Monday.

Sales

Klarman also sold out of: Sunrun Inc. (NASDAQ:RUN), Express Scripts Holding Co. (NASDAQ:ESRX) and Cascadian Therapeutics Inc. (NASDAQ:CASC).

Sunrun Inc. (NASDAQ:RUN)

Klarman sold 2,848,082 shares of Sunrun Inc., closing out the position. The stock’s price averaged $7 in the fourth quarter, below his quarterly average buy price of $10.

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Sunrun Inc. has a market cap of $1.19 billion; its shares were traded around $10.89 Monday with a P/E ratio of 8.57 and P/S ratio of 2.08.

Express Scripts Holding Co. (NASDAQ:ESRX)

Klarman sold 2,306,456 shares of Express Scripts Holding Co., which had an average price of $76 for the quarter, above his quarterly average buy price of $66.

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Express Scripts Holding Co. has a market cap of $41.38 billion; its shares were traded around $73.67 with a P/E ratio of 9.25 and P/S ratio of 0.42. Express Scripts Holding Co. had an annual average earnings growth of 19.40% over the past 10 years. GuruFocus rated Express Scripts Holding Co. the business predictability rank of 3-star.

Cascadian Therapeutics Inc. (NASDAQ:CASC)

Klarman sold 8,721,088 shares of Cascadian Therapeutics Inc., which had an average first-quarter price of $8, above his average quarterly buy price of $5.

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Cascadian Therapeutics Inc. has a market cap of $554.278 million; its shares were traded around $10.02 Monday.

See Seth Klarman (Trades, Portfolio)’s portfolio here.

About the author:

Holly LaFon
I'm a financial journalist with a master of science in journalism from Medill at Northwestern University.

Visit Holly LaFon's Website


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