Seth Klarman Stock Portfolio: Top 5 Stock Picks

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1. Liberty Global plc (NASDAQ:LBTYK)

Value of Baupost Group‘s 13F Position: $790 Million (LBTYK), $112 Million (LBTYA)

Number of Hedge Fund Shareholders: 38 (LBTYK), 31 (LBTYA)

Liberty Global plc (NASDAQ:LBTYK) is Seth Klarman’s top stock pick for the sixth straight quarter, as Baupost Group held 47.9 million class C shares of the company on September 30, down by 2% quarter-over-quarter. Klarman also owns 7.19 million class A shares of Liberty Global, which were left untouched during Q3. Hedge fund ownership of Liberty Global has cratered since the middle of 2016, falling by 71%.

Liberty Global plc (NASDAQ:LBTYK) faces some of the same problems that Liberty Media does in terms of its valuation, as the company trades at a notable discount in terms of a sum of the parts evaluation, as noted by Weitz Investment Management below. The company owns various broadband providers that operate throughout Europe, several of which struggled to retain customers during Q3.

All told, Liberty Global lost 14,000 customer relationships during the quarter compared to gaining 5,400 a year prior. More than half of those losses occurred in Belgium, where the company lost 7,700 customers and revenue fell by 12%. The company also lost at least 1,000 customers in Ireland, Slovakia, and Switzerland. Overall average revenue per unit also fell considerably during the quarter, by 10.6% to $61.62. Adjusted free cash flow fell to $148 million, just over half of what it was in the year-ago quarter.

Weitz Investment Management discussed why Liberty Global plc (NASDAQ:LBTYK) was one of its biggest Q3 detractors in the fund’s Q3 2022 investor letter:

“Carmax and Liberty Global plc (NASDAQ:LBTYA) were also detractors during the quarter and year-to-date. As for Liberty Global, the company owns a collection of European broadband providers that collectively trade at a discount to our “sum of the parts” value estimation. In recent quarters, their portfolio has had relatively stable, if uninspiring, results. The surging U.S. dollar dampens reported earnings, but management’s focus remains on growing local currency cash flows and identifying strategic opportunities to recognize the unappreciated value of their assets.”

For more of the latest stock picks worth considering for your portfolio, check out Ray Dalio’s Top 10 Dividend Stocks and the 12 Most Active Stocks To Buy.

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