Seth Klarman (Trades, Portfolio), considered a master of value investing, has two stocks in his portfolio that investors can purchase at relatively low prices.
Klarman’s picks intrigue investors because of his philosophy and uncommonly high returns. Speaking to MIT’s Sloan Investment Club in 2007, Klarman said his Boston-based Baupost Group, which manages about $30 billion, made money in 24 of the past 25 years. To achieve his record, he looks for mispricing in the market driven by temporary elements like emotion or disaster. He also tends to hold large amounts of cash while awaiting opportunity.
Finding worthwhile investments has proved challenging in a market continually registering historic highs, Klarman said in his 2017 letter.
"For each idea, it seems like we have to dig deeper to figure out something others have not, and there is growing competition for those insights," Klarman said. "In general, mispricings are less common and less stark, and expected returns are often at the low end of acceptability."
The two stocks Klarman found that are trading at 52-week lows are McKesson Corp. (MCK, Financial) and Saban Acquisition Corp. (SCAC, Financial).
McKesson Corp. (MCK, Financial)
With a $24.73 billion market cap, McKesson Corp. is a company that provides medical supplies, pharmaceuticals and health information technology. On Wednesday, its price had declined to $123.41 per share, about 1.04% above its 52-week low.
Klarman started a position in the company in the third quarter of 2017 at an average price of $156 per share. He then increased the stake each quarter, ending the second quarter with 1,627,700 shares, worth 1.96% of his portfolio. His approximate loss on the holding is estimated around 19%.
Saban Acquisition Corp. (SCAC, Financial)
Saban Acquisition Corp. is a “blank check” company founded in 2016 seeking to make an acquisition or merger with another business. The company’s founder is Haim Saban, a billionaire media investor and chairman of Univision.
The company’s shares traded Wednesday around $10.27 per share, about 3.05% above their 52-week low.
Klarman disclosed a stake in the company in the fourth quarter of 2016. He held about 2,326,500 shares, worth 31.19% of the company and 0.21% of his portfolio.
See Seth Klarman (Trades, Portfolio)’s portfolio here.
