Seth Klarman (Trades, Portfolio) and David Abrams (Trades, Portfolio) are both noted money managers who formerly worked together and who share a similar investing point of view.
Abrams started at Klarman’s Baupost Group in 1988 and left to launch his own firm, Abrams Capital Management, in 1999. Abrams Capital describes its approach as “fundamental, value-oriented” and “opportunistic.” Klarman likewise seeks companies that trade below his estimate of intrinsic value, stressing the need for an appropriate “margin of safety” between the price paid and the worth of the business.
Both Boston-based investors run relatively concentrated common stock portfolios. Klarman’s $12.7 billion portfolio lists 36 positions, while Abrams’ $3.78 billion portfolio contains 22 stocks.
Despite the concentration, the investors have three stocks in common, two of which are from the health care sector: Shire PLC (SHPG, Financial), Altaba (AAAB) and Keryx Biopharmaceuticals Inc. (KERX, Financial).
Abrams recently started his position in Shire PLC, buying 2,247,133 shares in the third quarter. It encompasses 10.77% of his portfolio. Klarman started his position in the company slightly earlier, in the second quarter, with 98,932 shares worth 0.14% of his portfolio.
The Ireland-based specialty drug company focuses on treatments for rare diseases. Shire PLC has a market cap of $51.18 billion; its shares were traded around $170.47 Thursday with a price-earnings ratio of 11.64 and price-sales ratio of 3.55. The trailing 12-month dividend yield of Shire PLC stocks is 0.62%. The forward dividend yield of Shire PLC stocks is 0.63%. Shire PLC had an annual average earnings growth of 19.10% over the past 10 years. GuruFocus rated Shire PLC the business predictability rank of 4-star.
Abrams first reported owning a stake in Altaba in the second quarter of 2017 and reduced it by less than 4% over the second and third quarter of 2018. At third-quarter end, he owned 3,769,842 shares, for a 6.79% portfolio weight. Klarman purchased 2,810,755 shares in the third quarter, making it 1.51% of his portfolio.
Altaba, a management investment company, formed after Yahoo sold its core business to Verizon in 2017 and changed its name. Altaba Inc. has a market cap of $34.11 billion; its shares were traded around $56.61 Thursday with a price-earnings ratio of 2.26 and price-sales ratio of 2.57.
Keryx Pharmaceuticals (KERX, Financial)
Abrams began buying Keryx Pharmaceuticals shares in the third quarter of 2015 and added more shares over the years. Most recently, he reduced the position by 8.45%, to end the third quarter with 9,108,867 shares accounting for 0.82% of the portfolio. Klarman gathered his shares from the first quarter of 2014 to the second quarter of 2015. He owned 25,791,678 shares at third quarter-end, a 0.69% part of his portfolio.
Klarman holding history:
Abrams holding history:
Keryx focuses on medical treatments for patients with kidney disease and merged with Akebia Therapeutics (AKBA, Financial) on Dec. 12.
See Seth Klarman (Trades, Portfolio)'s portfolio here. See David Abrams (Trades, Portfolio)' portfolio here.
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