Top 5 Stock Picks of Legendary Value Investor Seth Klarman

In this article, we discuss the top 5 stock picks of legendary value investor Seth Klarman. If you wish to read our comprehensive analysis of Klarman’s history and hedge fund performance, go directly to Top 10 Stock Picks of Legendary Value Investor Seth Klarman.

Percentage of Baupost Group’s 13F Portfolio: 6.52%

Baupost Group’s Stake Value: $660.4 million

Alphabet Inc. (NASDAQ:GOOG) is up next on Seth Klarman’s list of top 10 stocks to buy. The technology giant featured in the portfolios of 158 hedge funds out of the 924 hedge funds tracked by Insider Monkey during the fourth quarter, with overall holdings worth $36.6 billion. This shows a positive trend from the previous quarter where 156 hedge funds owned stakes worth almost $35 billion in Alphabet Inc. (NASDAQ:GOOG).

Baupost Global owned 228,000 shares of Alphabet Inc. (NASDAQ:GOOG) in Q4 2021 at a value of $660.4 million. This amounts to a 6.52% slice of the fund’s overall portfolio, and signals a decrease of 22% in holding over the preceding quarter. In Q4 2021, TCI Fund Management was the largest shareholder of Alphabet Inc. (NASDAQ:GOOG) owning 2.95 million shares worth $8.54 billion.

On April 19, Rosenblatt analyst Barton Crockett initiated coverage of Alphabet Inc. (NASDAQ:GOOG) with a ‘Buy’ rating and $4,183 price target. The analyst notes that no firm is better positioned than Alphabet to take advantage of the online sphere, given its advantaged positioning for new ad privacy restrictions, dominance in viral video and emerging success in cloud services.

Percentage of Baupost Group’s 13F Portfolio: 7.16%

Baupost Group’s Stake Value: $725.5 million

Then there’s ViaSat, Inc. (NASDAQ:VSAT), a California-based communications firm which offers services such as satellite-based broadband internet. Billionaire Seth Klarman owned a $725 million stake in ViaSat, Inc. (NASDAQ:VSAT) during the fourth quarter, comprising of 16.28 million shares representing 7.16% of his overall portfolio. This made Baupost Group the largest shareholder of the firm in Q4 2021.

In April, ViaSat, Inc. (NASDAQ:VSAT) was awarded a validation by regulatory authorities in China for its in-flight connectivity system to be used by the Airbus A320 series of jets. ViaSat, Inc. (NASDAQ:VSAT) has also recently partnered up with Slovakia to provide Ukrainian refugees in Eastern Europe access to free high-speed internet using the firm’s satellite-enabled Community Internet system.

ViaSat, Inc. (NASDAQ:VSAT) posted an EPS of $0.33 in the fourth quarter, outperforming estimates by $0.11. The firm recorded quarterly revenue of $719.72 million by end of December, surpassing analysts’ forecasts by $4.68 million and growing 25.05% year-on-year.

Investors were keen on ViaSat, Inc. (NASDAQ:VSAT) in the fourth quarter of 2021, as 21 hedge funds held $1.03 billion worth of positions in the company. This shows a positive trend from the preceding quarter where 18 hedge funds held stakes in the communications firm.

Percentage of Baupost Group’s 13F Portfolio: 9.17%

Baupost Group’s Stake Value: $928.9 million

Intel Corporation (NASDAQ:INTC) shares comprise 9.17% of Seth Klarman’s total portfolio according to 13F filings for the fourth quarter. The billionaire owned more than 18 million shares of the company at a price tag of $928.9 million. Hedge funds were also bullish on Intel Corporation (NASDAQ:INTC) during Q4 2021, where 72 hedge funds reported bullish bets on the company shares as opposed to 66 hedge funds a quarter ago.

On April 12, Citi analyst Christopher Danely maintained a ‘Neutral’ rating on Intel Corporation (NASDAQ:INTC) shares, and set a price target of $55, on the back of lower than expected growth in notebook shipments and his belief that PC sales could slow down in the second half of 2022.

For the fourth quarter, Intel Corporation (NASDAQ:INTC) reported earnings per share of $1.09, exceeding analysts’ forecasts by $0.18. $19.53 billion in quarterly revenue also outperformed estimates by $1.21 billion.

Here is what ClearBridge Investments had to say about Intel Corporation (NASDAQ:INTC) in its Q1 2022 investor letter:

“In the early days of the invasion, we made two measured changes to the portfolio based on longer-term fallout we anticipate from Russia’s invasion of Ukraine. We initiated a position in Intel (NASDAQ:INTC).

Over the last year, Pat Gelsinger, Intel’s new CEO, has devised a bold and aggressive strategy shift for the company. Gelsinger wants to open Intel’s factories to manufacture chips for competitors and thereby increase the utilization of Intel’s machinery. Doing so could increase the company’s returns and profits and bolster its competitive moat. While we admired these moves and saw their potential merit, we sat on the sidelines.

Intel’s repositioning requires tens of billions of dollars of increased investment and entails more risk than we are usually comfortable with. Russia’s invasion of Ukraine, however, changed our calculus. It revealed the fragility of the international order and drove home the importance of local manufacturing for critical industries like semiconductors.

Over several decades Taiwan has become the leading source for cutting-edge computer chips. With China determined to control Taiwan, this poses a critical strategic risk for the U.S. and the West. Concern over this threat has simmered for years but the war in Ukraine marks a boiling point. Indeed, just two weeks after Russia invaded Ukraine, Germany offered Intel over €5 billion in subsidies to build a plant in-country. We expect the U.S. will soon do the same. As Intel embarks on this new course, there is significant, long-term upside potential for the shares. This strategy entails meaningful risks, but at the $45 price we paid for our shares, we believe the risk/reward was asymmetrically skewed in our favor.”

Percentage of Baupost Group’s 13F Portfolio: 9.18%

Baupost Group’s Stake Value: $929.9 million

Baupost Group’s Stake Value: $1.51 billion

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