Below are billionaire Seth Klarman’s top 5 stock picks for 2021. To read our detailed analysis of the billionaire’s stock-picking performance and his latest moves, see Billionaire Seth Klarman’s Top 10 Stock Picks for 2021.
5. Fox Corporation (NASDAQ: FOXA)
Baupost Group reduced its position in Fox Corporation (NASDAQ: FOXA) during the fourth quarter to 5.95% of the overall 13F portfolio, according to the latest filings. Still, FOXA ranks 5th on the list of Seth Klarman’s top 10 stock picks for 2021. Shares of Fox grew sharply since the beginning of this year, thanks to revenue growth prospects for 2021.
Silver Ring Value Partners, which posted a return of 26.6% for the last 12 months, sold their position in Fox Corporation during the fourth quarter. Here is what Silver Ring Value Partners stated in their Q4 investor letter:
“I sold our investment in FOX during the quarter at a small loss and redeployed the proceeds into shares of Discovery Communications and Mednax. The main reason for my sale was a new competitive threat, which widened the range of likely company outcomes. Furthermore, it added a competitive threat to the existing threat of secular decline that the industry is already battling to overcome. The probability of being right on having two independent things work out for the company is much lower than of it overcoming just one problem.
Fox Corp gets a substantial majority of its profits from Fox News. This is a network with very inelastic demand which has appeal to the ~45% of the country with conservative political views. With President Trump having lost the election, he began to agitate his supporters to switch viewership to more right-wing news outlets that were being more supportive of him and his claims about the election. Furthermore, there has been talk of him launching or backing a competing network, fracturing the conservative audience.”
4. Qorvo, Inc. (NASDAQ: QRVO)
Shares of Qorvo, Inc. (NASDAQ: QRVO) outperformed the broader market trends both in 2020 and since the beginning of 2021. Seth Klarman looks bullish over the future fundamentals of Qorvo as the billionaire investor has raised his stake in the semiconductor company by 49% during the December quarter. It is the fourth largest stock holding of Baupost Group valued at $738 million.
Qorvo develops and commercializes technologies and products for wireless and wired connectivity worldwide. The company operates in two segments: Mobile Products, and Infrastructure and Defense Products.
3. Intel Corporation (NASDAQ: INTC)
Seth Klarman used the dip in Intel Corporation’s (NASDAQ: INTC) stock price as a buying opportunity. The firm created a big position in the information technology company during the fourth quarter when its shares tumbled significantly due to increased market competition. However, Intel’s stock price bounced back since the beginning of this year and reversed recent losses amid new CEO Pat Gelsinger’s transition strategies.
In a Q4 investor letter, investment management firm Third Point LLC commented on a few stocks including Intel Corporation. Here is what Third Point said:
“After building a significant stake in Intel in Q4, we sent a letter on December 29th to Intel’s Board Chairman, Omar Ishrak. We shared our views regarding Intel’s dramatic underperformance and suggested certain steps the company could take to remedy a rapidly deteriorating outlook. We highlighted an urgent need for Intel to address its “brain drain” of engineering talent, the chief cause of the manufacturing and design deficiencies that have led to its declining market share.
Shortly after our note and engagement with the company, Intel announced it was bringing back Pat Gelsinger as its new CEO. Gelsinger is a respected engineer and manager who previously spent 30 years of his career working closely with Intel’s legendary founders during the company’s best days. With a background in electrical engineering and prior roles such as head of Intel’s digital enterprise group, desktop products group, and Intel Labs, and as the company’s first CTO, Gelsinger has the deep technical expertise needed to address Intel’s current execution issues. He also has a history of success in reinvigorating major organizations. During his eight-year tenure as CEO of VMWare, he put the on-premise company on a path to the hybrid cloud and positioned it for several years of growth ahead.”
2. Liberty Global Plc (NASDAQ: LBTYK)
Seth Klarman left his position unchanged in Liberty Global Plc (LBTYK) during the fourth quarter as shares of the communication company have steadily been recovering the previous losses. LBTYK stock price jumped 28% in the last twelve months. It is the second-largest stock holding of Baupost Group, according to the latest 13F filings.
Liberty Global plc, together with its subsidiaries, provides broadband internet, video, fixed-line telephony, and mobile communications services to residential customers and businesses.
1. eBay Inc. (NASDAQ: EBAY)
Seth Klarman’s largest stock position eBay Inc. (NASDAQ: EBAY) continues to perform well over the past two years. Shares of the e-commerce platform rose 48% in the last twelve months and outperformed the market trends in 2021. The firm held 31.1 million shares of eBay at the end of the fourth quarter.
In a Q4 investor letter, Steel City Capital highlighted few stocks including eBay. Here’s what Steel City Capital stated:
“eBay (Long): EBAY continues to be a core holding in the Partnership’s long book despite not having any “sexy” attributes or unknown catalysts. I like EBAY because it checks the boxes of being both capital light and priced as a value stock (low multiple of free cash flow), factors which are attractive in a potentially inflationary environment.
In 3Q’20 the company printed $2.6 billion of revenue vs. guidance of $2.4 billion (a $200 million beat) while full year revenue guidance was taken up by $400 million, implying 4Q’20 would be higher by $200 million as well. Free cash flow from continuing ops was guided to $2.3 billion for the full year, slightly above the $2.0 billion the business regularly generated before getting a Covid/stimulus related boost.”
Please also see Billionaire Stan Druckenmiller’s Top 10 Stock Picks and Ray Dalio’s Top 10 Stock Picks for 2021.
