Baupost Group is one of the top hedge funds of the world, with approximately $27 billion in assets under management. The Boston-based firm is run by its founder, Seth Klarman, a Harvard Business School graduate and famed author of the fundamental investing bible, Margin of Safety. Quite recently, Baupost filed its 13F for the fist quarter of fiscal 2016, disclosing its long equity stakes as of March 31. The equity portfolio was valued at $6.92 billion at the time, up from $5.51 billion at the end of the previous quarter. While diversified, the portfolio had a focus on information technology and energy stocks, which accounted for roughly 40% and 28% of the total holdings, respectively. So, let’s take a look into the fund’s top picks for the second quarter of 2016, and into some recent events involving these companies.
Our research determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).
#5 Allergan plc Ordinary Shares (NYSE:AGN)
– Number of shares owned by Baupost as of March 31: 1.72 Million
– Value of Baupost’s stake as of March 31: $461.4 Million
The fifth spot in Klarman’s list was occupied by a newcomer: Allergan plc Ordinary Shares (NYSE:AGN). The new stake accounted for more than 6.6% of the fund’s equity portfolio, and made it one of the top 10 hedge fund investors of record as of March 31. An ever larger stake was the one held by John Paulson’s Paulson & Co, which last disclosed ownership of 5.41 million shares of the company, worth roughly $1.45 billion by the end of the first quarter. Since the first quarter ended, shares of Allergan have fallen more than 14.3%, mostly on the back of the cancellation of the Pfizer Inc. (NYSE:PFE) deal. Last week, however, shares recuperated some of the lost ground after the company delivered first quarter EPS of $3.04, beating the Street’s consensus by $0.01 – even though revenue of $3.8 billion missed estimates by $160 million. In addition, the company’s Board authorized up to $10 billion in new stock repurchases; about half of that could be spent over the next six months, if market conditions are favorable, the company said.
Follow Allergan Plc (NYSE:AGN)
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#4 Antero Resources Corp (NYSE:AR)
– Number of shares owned by Baupost as of March 31: 21.5 Million
– Value of Baupost’s stake as of March 31: $534.8 Million
Even in spite of a 12% increase in Baupost’s stake, Antero Resources Corp (NYSE:AR) remained in the same position as a quarter earlier. However, the value of the stake rose considerably, as the shares gained 14.08% over the first quarter. According to our data, Baupost was, by far, the largest hedge fund shareholder of record in the company, trailed from far behind by Bob Peck and Andy Raab’s FPR Partners, which last declared holding 9.3 million shares. Antero’s stock continued to surge over the second quarter of the year, posting a 6.8% return so far. However, the shares experienced considerable weakness toward the end of April, following a first quarter earnings miss announced on April 27. But, over the past few days, the tumble was somewhat offset by a recuperation in energy prices, which helped the sector as a whole.
