Two of the world's best value investors made some significant changes to their portfolios in the fourth quarter of last year.
Yesterday, Seth Klarman (Trades, Portfolio)'s Baupost Group and Mohnish Pabrai (Trades, Portfolio)'s Pabrai Investments both filed their 13F documents with the SEC, detailing equity positions held at the end of 2018.
The 13F is a document every hedge fund manager overseeing more than $100 million in assets is required to file every quarter, at least 45 business days after the end of each calendar quarter. They offer unrivaled insight into the portfolios of investment managers, but they are backward-facing and only limited to equity positions. The filings do not detail cash holdings, private equity, real estate or debt. They are just a snapshot of the equity portfolio at the end of the last calendar quarter, so they leave plenty out.
What's more, these documents are only a starting point for further research and should not be relied upon for portfolio construction -- they contain no detailed analysis on the companies, just the number of shares owned and the price paid.
Still, as noted above they are a great starting point for further research, which is why I pay close attention to them every quarter.
What's Pabrai buying?
In recent years, Mohnish Pabrai (Trades, Portfolio) has liquidated substantially all of his U.S. equity portfolio, apart from Fiat Chrysler (FCA, Financial), which accounts for the bulk of his assets at Pabrai Investments.
The rest of the portfolio is invested primarily in Indian securities, where the respected value investor believes there is more value to be found than in the U.S. at present.
With this being the case, I was surprised to see Micron Technology Inc. (MU, Financial) listed in his quarter-end 13F. This is a new position for Pabrai, although it is a relatively small part of his portfolio. At the end of the quarter, the position was around $17.3 million. That's compared to the Pabrai Funds' overall assets under management of around $600 million.
It is notable that this value investor, who has shunned U.S. stocks in recent years, has decided to include this company in his portfolio. Other big names are also in the stock as well, including David Tepper (Trades, Portfolio)'s Appaloosa Management and Lee Ainslie (Trades, Portfolio)'s Maverick Capital.
According to Tepper's last 13F, Micron makes up around 29% of his portfolio, accounting for $1.6 billion of assets under management.
Klarman boosts existing holdings
Klarman made many more changes to his portfolio than Pabrai in the last quarter. There were no substantial changes in the most significant portfolio holdings, apart from what can only be described as a few small trades, notably a reduction of 1.4% in his holding of 21st Century Fox (FOXA, Financial) stock, which is worth $2.6 billion 22.2% of his equity portfolio.
A big change was an increase of nearly 200% in his holding of Liberty Global (LBTYK, Financial) stock. The Boston-based hedge fund manager hiked his holding of this stock up to nearly 30 million shares, and it now makes up 5.5% of the Baupost equity portfolio. The position is worth around $600 million, compared to the overall equity portfolio value of $11.1 billion and Baupost's total assets under management, which are estimated to be in the mid-$20 billion range.
Klarman also added to his holding of Pioneer Natural Resource (PXD, Financial) by 12.5% to 4.5 million shares and Antero Resources (AR, Financial) by 29 million shares.
The most notable change in Baupost's portfolio last quarter was the addition of eBay Inc. (EBAY, Financial). Klarman acquired 21 million shares in the online auction site, spending just under $600 million. The position now accounts for 5.3% of the Baupost equity portfolio.
He also initiated smaller positions in Akebia Therapeutics Inc. (AKBA, Financial), CBS Corp. (CBS, Financial), Nexstar Media Group (NXST, Financial) and GTY Technology Holdings Inc WTS (GTYH, Financial). Together, these for new positions are worth around $322 million, or just under 3% of the overall equity portfolio.
Disclosure: The author owns no stock mentioned.
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Mohnish Pabrai Buys Shares of Tepper Stock Micron Technology
