Below is the list of 5 stocks billionaire Seth Klarman likes the most now. For a detailed discussion about Seth Klarman’s stock market outlook and investment philosophy please see 15 Stocks Billionaire Seth Klarman Likes the Most Now.
5. Fidelity National Information Services, Inc. (NYSE:FIS)
Value of Baupost Group’s 13F Position: $370 million
Number of Hedge Fund Shareholders: 70
During the second quarter, billionaire Seth Klarman’s firm increased its stake in Fidelity National Information Services, Inc. (NYSE:FIS) by 40%. The value investor appears to have used the drop in share price as a buying opportunity. Year to date, the share price of Fidelity plunged around 20%. However, the company has presented a higher-than-expected outlook for the full year, which would help restore investor confidence. It now expects revenue of $14.5 billion to $14.6 billion in 2023, compared with prior guidance of $14.2 billion to $14.5 billion.
As of the end of the second quarter, Fidelity National Information was in 70 hedge fund portfolios, flat compared to the previous quarter.
4. Veritiv Corporation (NYSE:VRTV)
Value of Baupost Group’s 13F Position: $417 million
Number of Hedge Fund Shareholders: 21
Veritiv Corporation (NYSE:VRTV) is among the best performers in the list of 15 stocks billionaire Seth Klarman likes the most. Its stock has risen by more than 40% year to date. The $2.3 billion buyout offer by Clayton Dubilier & Rice is fueling the share price rally. According to an announcement, Seth Klarman’s Baupost Group, who held almost a 25% stake in the company, also supports the transaction. Veritiv Corporation belongs to the industrial sector and is engaged in providing packaging products, facility solutions, and print-based products.
As of the end of the second quarter, Veritiv was in 21 hedge fund portfolios compared to 18 positions in the previous quarter.
3. Alphabet Inc. (NASDAQ:GOOG)
Value of Baupost Group’s 13F Position: $498 million
Number of Hedge Fund Shareholders: 367
Alphabet Inc. (NASDAQ:GOOG) has outperformed the S&P 500 and the NASDAQ so far in 2023, with a nearly 50% share price return. The uptrend is being fueled by AI hype, as well as strong growth in the advertisement segment. In the second quarter, the company outperformed on both the top and bottom lines. Its second-quarter revenue increased by 7% to $74.6 billion, thanks to $42.6 billion in search and other revenue, YouTube ad revenue of $7.67 billion, and Google Network ad revenue of $7.85 billion.
In the second quarter investor letter, Artisan Partners, an investment management company, highlighted factors that helped Alphabet outperform. Here is what the firm stated:
“Our best performing stocks this quarter were Meta, Alphabet Inc. (NASDAQ:GOOG) and Heidelberg Materials. The rise in Alphabet’s share performance was primarily driven by the AI frenzy. Earlier this year, there were some doubts about Alphabet’s ability to compete with OpenAI’s ChatGPT product. This was a bit ironic since Alphabet has been using AI technology to improve its Google search results and advertising business for years. Indeed, the technology that underpins OpenAI’s ChatGPT actually came from Alphabet more than five years ago. But sometimes the market needs a reminder, and Alphabet provided tangible evidence of its capabilities. At a recent developer conference, it launched Bard, a consumer-oriented generative AI version of its search engine, as well as several other concrete examples of how AI could improve its current business. As with Meta, the long-term implications of AI on Alphabet’s business model are still far from certain. But we do believe that it is a technology leader in this field and will participate in whatever direction the technology develops.”
2. Viasat, Inc. (NASDAQ:VSAT)
Value of Baupost Group’s 13F Position: $672 million
Number of Hedge Fund Shareholders: 13
Following a range-bound movement in early 2023, the share price of Viasat, Inc. (NASDAQ:VSAT) has dropped sharply in recent months due to uncertain events such as a minor disruption during the deployment of its ViaSat-3 Americas satellite’s reflector. Furthermore, a larger-than-expected loss in the second quarter exacerbated the downward trend.
However, value investors like Seth Klarman are constantly on the lookout for undervalued stocks. In the second quarter investor letter, investment management company, Cove Street Capital, stated reasons that make Viasat a worthy investment. Here is what the firm stated:
“You, the reader, might find it hard to believe that we are this far into the letter before having any mention of Viasat, Inc. (NASDAQ:VSAT). It is satisfying to see “alphaesque” work finally see the light of day or the darkness of space depending upon your angle, but we aren’t to the promised land yet. We believe the market is just waking up to what VSAT has been working towards. As a quick recap, VSAT has been one of our largest positions for a number of years and unfortunately became our largest long Covid exposure stock which we did not realize at the time. The bearish premise on Viasat has largely been that they are throwing up billions of dollars in the wrong geosynchronous orbit and returns will be eaten by Starlink and other low Earth orbit (LEO) entrants. That’s hard to disprove when the damn satellite isn’t in the air. Well after much delay and a few breathless moments at T-minus, Viasat launched the first of its three VST3 constellation satellites. Yours truly spent 3 days at Cape Canaveral with management and other interested parties in weather delayed futility. The launch finally happened the day after I returned home. We believe that launching and preparing the satellite for operation will begin a massive change: bringing hundreds of millions of dollars of non-earning assets online and turning on the cashflow stream that the company has said was coming all this time. And if that isn’t exciting enough, during the quarter, VSAT closed on its acquisition of Inmarsat, which may prove to be a master stroke….stay tuned. Why events like this cluster together is hard to know.
Amid the tens of billions that have been burnt in space investing in the last 3 years and the mystery of Starlink math and Amazon’s Kuiper existence, Viasat in our opinion is one of only a handful of investable assets in the sector. Being up more than 25% this year is barely getting started if one does some conservative math. And we are actively attempting not to succumb to the “been down so long it looks like up to me” refrain which is irrelevant to the actual value at hand. And it’s a good example of “sell or not” discipline which people ask us about when things are not going well. Uncertainty on many fronts is receding, a state much prized by an investment world that has problems seeing beyond 3 months, and we see material gains from current levels.”
1. Liberty Global plc (NASDAQ:LBTYA)
Value of Baupost Group’s 13F Position: $121 million
Number of Hedge Fund Shareholders: 67
Liberty Global plc (NASDAQ:LBTYA) is a long-standing stock in the Baupost Group portfolio. Although Liberty Global’s shares have remained under pressure so far in 2023, the company appears well-positioned to increase revenue and adjusted EBITDA. Moreover, it repurchased approximately 8% of its outstanding shares in the second quarter, with plans to reduce the outstanding share count by 15% by the end of the year. The company also appears to be in a position to support its buyback plans with $5.5 billion in total liquidity, including $2.7 billion in cash. Liberty Global is also on track to complete its pending move to Bermuda by the end of 2023.
Hedge funds are also showing interest in a communication services company. Liberty Global was in 67 hedge fund portfolios at the end of the second quarter, up from 62 the previous quarter. According to Insider Monkey data, Harris Associates was the largest stakeholder in the company.
You can also take a look at the Top 25 Dividend Stocks of 2023 and 17 George Soros Stocks that are on Sale Now.
