Today, let’s look at investing giant Seth Klarman, who founded the Baupost Group hedge fund company back in 1982. Klarman is a successful investor with a lot to teach us. He sticks to his value-investing principles so much that at times he has a large chunk of his assets in cash, not finding sufficient bargains.
Why should you look at Baupost’s moves? Well, according to the folks at GuruFocus.com, it has averaged gains of close to 20% annually since its inception, far outstripping the S&P 500. The company’s reportable stock portfolio totaled $3.1 billion in value as of Dec. 31, 2012.
Interesting developments
So what does Baupost’s latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are American International Group, Inc. (NYSE:AIG) and Microsoft Corporation (NASDAQ:MSFT) calls. AIG looks appealing to some, with its recent P/E ratio near 3 and a forward one near 10. It has cut a deal with HSBC Holdings plc (ADR) (NYSE:HBC) to sell insurance products in Europe and parts of the Middle East, and is introducing its new CorporateGuard insurance in Europe as well,which is designed to protect directors of companies in these days of extra attention to corporate governance. Share buybacks at recent low levels are also very promising.
Among holdings in which Baupost increased its stake was Idenix Pharmaceuticals, Inc. (NASDAQ:IDIX), which is down some 57% over the past year. It has offered some mixed news lately, from a partnership with a Johnson & Johnson (NYSE:JNJ) subsidiary to develop Hepatitis C treatments to a decision to halt development on several other Hep C drugs that didn’t look promising.
Baupost reduced its stake in companies such as Enzon Pharmaceuticals, Inc. (NASDAQ:ENZN) and Oracle Corporation (NASDAQ:ORCL). Late last year, Enzon announced that it was looking into selling off parts or all of itself, and that it was also calling off clinical trials of a prostate cancer treatment. Activist investor Carl Icahn has been a major shareholder in the company.
Oracle, meanwhile, has been shifting its focus from hardware to the cloud computing realm. It has been posting double-digit revenue and earnings growth rates over the past few years. Oracle is buying telecom infrastructure specialist Acme Packet, which has some scratching their heads due to a lot of strong competition in its field and others bullish, due to CEO Larry Ellison often making surprising but effective moves. Oracle is also suing Google Inc (NASDAQ:GOOG) for alleged patent infringement regarding Java.
Finally, Baupost’s biggest closed positions included Hewlett-Packard Company (NYSE:HPQ) and Microsoft. HP has been one of the worst performers in both the Dow and the S&P 500. Some lament that HP missed the boat on smartphones and tablets, but all might not be lost, as the company seems to be working on an Android tablet. With former eBay Inc (NASDAQ:EBAY) CEO Meg Whitman relatively new at the helm, it remains to be seen whether HP will be able to turn itself around.
We should never blindly copy any investor’s moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing. 13-F forms can be great places to find intriguing candidates for our portfolios.
The article Here’s What Super-Investor Seth Klarman Has Been Buying originally appeared on Fool.com and is written by Selena Maranjian.
Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Microsoft, Google, Johnson & Johnson, and eBay. The Motley Fool recommends Acme Packet, American International Group, eBay, Google, and Johnson & Johnson. The Motley Fool owns shares of American International Group, eBay, Google, Johnson & Johnson, Microsoft, and Oracle. and has the following options: Long Jan 2014 $25 Calls on American International Group.
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