GOOGL - Tracking Seth Klarman's Baupost Group Holdings - Q3 2023 Update

2023-11-16 20:59:03 ET

Summary

• Baupost Group's 13F portfolio value decreased from $5.61B to $5.21B this quarter.
• The portfolio is heavily concentrated with Liberty Global, Liberty Media Sirius XM, Veritiv, Alphabet, and Fidelity National Information Services accounting for ~56% of the holdings.
• New positions include Clarivate plc, Jacobs Solutions, Liberty Media Live, and Tower Semiconductor.

This article is part of a series that provides an ongoing analysis of the changes made to Baupost Group's 13F stock portfolio on a quarterly basis. It is based on Klarman's regulatory 13F Form filed on 11/13/2023. Please visit our Tracking Seth Klarman's Baupost Group Holdings article for an idea on how his holdings have progressed over the years and our previous update for the fund's moves during Q2 2023.

Baupost Group's 13F portfolio value decreased from $5.61B to $5.21B this quarter. The total number of 13F securities increased from 29 to 32. The portfolio is heavily concentrated with Liberty Global, Liberty Media Sirius XM, Veritiv, Alphabet, and Fidelity National Information Services together accounting for ~56% of the 13F holdings.

Since inception (1982), Baupost Group's 13F portfolio has accounted for between 2.4% to 15% of the Assets Under Management ((AUM)). The current allocation is at the high-end of that range. The rest of the AUM is diversified among cash, debt, real estate, and hedges. On average, the fund has held ~25% cash over the last decade. Seth Klarman's distinct investment style is elaborated in his 1991 book " Margin of Safety: Risk-averse value investing strategies for the thoughtful investor ". The book is out-of-print and copies sell for a huge premium.

New Stakes:

Clarivate plc ( CLVT ), Jacobs Solutions ( J ), Liberty Media Live ( LLYVA ), and Tower Semiconductor ( TSEM ): These are the new positions this quarter. The 2.90% of the portfolio CLVT position was established at prices between $6.60 and $9.90 and the stock currently trades at $7.24. Jacobs Solutions is a 1.28% of the portfolio stake established at prices between ~$119 and ~$137. The stock currently trades at $133. Liberty Media Live came to market through a spin-out and reclassification of Liberty SiriusXM. Shareholders received 0.25 shares of Liberty Live for each Liberty SiriusXM. Baupost has a large position in Liberty SiriusXM for which they received these shares. LLYVA started trading in August at ~$36 and it is currently at ~$35. TSEM is a 1.34% of the portfolio stake established at prices between ~$24 and ~$38. The stock is now at $27.06.

Stake Disposals:

Amazon.com ( AMZN ), and Union Pacific ( UNP ): AMZN was a 2.24% of the portfolio position purchased last quarter at prices between ~$98 and ~$130 and the stock is now above that range at ~$143. The position was sold this quarter at prices between ~$126 and ~$145. UNP was a very small 0.64% stake established last quarter and disposed this quarter.

Stake Increases:

Fidelity National Information Services ( FIS ) : The 7.38% FIS position was purchased during Q3 2022 at prices between ~$76 and ~$105 and it is now well below the low end of that range at $53.90. There was a ~250% stake increase during Q4 2022 at prices between ~$57 and ~$85. That was followed with a ~125% increase next quarter at prices between ~$50 and ~$78. The last quarter also saw a ~40% increase at prices between ~$52 and ~$59. There was a minor ~3% increase this quarter.

Willis Towers Watson ( WTW ) : WTW is a 6.23% of the portfolio stake established in Q1 2021 at prices between ~$200 and ~$235. The two quarters through Q3 2021 saw a ~60% selling at prices between ~$202 and ~$270 while the next quarter there was a ~25% stake increase at prices between ~$226 and ~$249. There was a similar reduction in Q2 2022 at prices between ~$191 and ~$243. Q3 2022 saw a ~40% increase at prices between ~$192 and ~$221 while during Q1 2023 there was a one-third reduction at prices between ~$220 and ~$257. This quarter saw a ~72% stake increase at prices between ~$196 and ~$234. The stock currently trades at ~$243.

CRH plc ( CRH ), and Dollar General ( DG ) : The 3.51% CRH stake was primarily built this quarter at prices between ~$53 and ~$60. The stock currently trades at $59.19. The 1.88% DGEN stake was established during the last two quarters at prices between ~$105 and ~$222. The stock is now at ~$118.

Stake Decreases:

Liberty Global ( LBTYK ) : LBTYK is currently the largest position at 17.42% of the portfolio. It was established in Q3 2018 at prices between $25 and $28.50 and increased by ~120% next quarter at prices between $19.50 and $27.50. There was another ~27% stake increase in Q1 2019 at prices between $19.80 and $25.80. Since then, the activity had been minor. There was a ~10% reduction in Q2 2022 at prices between ~$22 and ~$26. The last two quarters have seen another ~10% trimming. The stock currently trades at $17.28.

Alphabet Inc. ( GOOG ) : The large (top five) ~10% GOOG stake was purchased in Q1 2020 at prices between ~$53 and ~$76. The last three quarters of 2020 had seen a ~75% selling at prices between ~$55 and ~$92. There was a ~265% stake increase in Q1 2021 at prices between ~$86 and ~$105. Q4 2021 saw a ~22% trimming at prices between ~$133 and ~$151 while next quarter there was a ~7% increase. The zig-zag trading pattern continued in the next quarter: ~30% reduction at prices between ~$106 and ~$144. That was followed with another ~60% selling during Q3 2022 at prices between ~$96 and ~$123. The stake was rebuilt next quarter at prices between ~$83.50 and ~$105. Q1 2023 saw a ~47% stake increase at prices between ~$87 and ~$109 while the last quarter saw a ~30% selling at prices between ~$104 and ~$128. The stock is now at ~$139. This quarter also saw a ~7% trimming.

ViaSat ( VSAT ) : VSAT is a fairly large position at ~6% of the portfolio. Klarman first purchased VSAT in 2008 at much lower prices and his overall cost-basis is in the high-teens. In July 2020, Baupost participated in ViaSat's 4.47M share private placement by acquiring ~2.56M shares at ~$39 per share. The stock currently trades at $19.40. There was marginal trimming this quarter.

Note: Baupost's ownership stake in the business went down from 21% to 13% following ViaSat's acquisition of Inmarsat due to the related dilution.

SS&C Technologies ( SSNC ) : SSNC is a 2.32% position built in Q3 2020 at prices between ~$56 and ~$65. The two quarters through Q1 2021 had seen a ~25% stake increase at prices between ~$63 and ~$71. There was a ~22% selling in Q2 2022 at prices between ~$55 and ~$79. The next quarter saw a similar increase at prices between ~$48 and ~$63. There was a ~13% trimming during Q1 2023 while in the last quarter there was a similar increase. There was a ~40% selling this quarter at prices between ~$53 and ~$63. The stock is now at $54.76.

Qorvo, Inc. ( QRVO ) : QRVO is a 1.71% portfolio stake established in Q1 2017 at prices between $53 and $69 and increased by ~25% the following quarter at prices between $63 and $79. There was another ~22% stake increase in Q4 2017 at prices between $65 and $81. 2019 had seen a ~75% selling at prices between $60 and $118. Q4 2020 saw an about turn: ~50% stake increase at prices between ~$125 and ~$170. That was followed with a ~18% further increase next quarter. The two quarters through Q1 2022 saw another ~31% stake increase at prices between ~$119 and ~$178. The last three quarters saw a ~61% reduction at prices between ~$78 and ~$114. There was a similar reduction this quarter at prices between ~$94 and ~$110. The stock is now at ~$94.

New Oriental Education ( EDU ) : EDU is a 1.15% of the portfolio position purchased in Q2 2022 at prices between ~$9.75 and ~$23.50. There was a ~25% selling during Q4 2022 at prices between ~$19 and ~$40. That was followed by a similar reduction last quarter at prices between ~$36 and ~$46. This quarter saw another ~75% selling at prices between ~$40 and ~$59. The stock is now at ~$69.

Garrett Motion ( GTX ) : Baupost controlled ~32% of Garrett Motion ( GTX ) as of Q1 2023. The bulk of the ownership was through a series A preferred share offering. They were converted to common stock last quarter. This quarter saw a ~80% reduction at prices between $7.23 and $8.04. The stock is now at $7.40.

Kept Steady:

Liberty Media Sirius XM ( LSXMK ) : The ~11% LSXMK stake was primarily built in Q3 2020 at prices between ~$23 and ~$28. Q4 2020 saw a ~14% stake increase. The four quarters through Q2 2022 saw the position doubled at prices between ~$26 and ~$47. The stock currently trades at $26.37.

Note: The prices quoted above are adjusted for the Liberty Live spin-out and reclassification in August.

Veritiv Corporation ( VRTV ) : VRTV is a ~11% of the 13F portfolio position established in Q3 2014 at prices between $32.50 and $50.50. Q4 2017 saw a ~20% stake increase at prices between $22.50 and $32.50. The stock currently trades at $169.81.

Note: Klarman's ownership interest in VRTV is ~25%. In August, the stock popped as they received a $170 per share cash offer from an affiliate of Clayton, Dubilier & Rice, LLC.

Warner Brothers Discovery ( WBD ) : The fairly large 5.26% of the portfolio stake in WBD was established in Q2 2022 at prices between ~$13 and ~$26. The next quarter saw a ~60% increase at prices between ~$11.30 and ~$17.50. The stock is now at $10.32. There was a minor ~7% stake increase during Q4 2022 while the next quarter saw a ~19% trimming.

Jazz Pharmaceuticals (JAZZ) : The 1.67% position in JAZZ stake was purchased during Q1 2023 at prices between ~$134 and ~$161 and it is now at ~$122. There was a ~40% stake increase last quarter at prices between ~$123 and ~$147.

Theravance Biopharma ( TBPH ) : TBPH is a 1.23% of the portfolio position established in Q2 2014 as a result of the spinoff of TBPH from Theravance (now Innoviva). The spinoff terms called for Theravance shareholders to receive 1 share of TBPH for every 3.5 shares of Theravance held. The two quarters through Q3 2021 saw a ~50% stake increase at prices between ~$7 and ~$22.50. The last three quarters saw a ~45% selling at prices between ~$9.70 and ~$12. The stock is now at $10.29.

Note: they have a ~13% ownership stake in the business.

Seagate Technology ( STX ) : The 0.76% STX stake was primarily built last quarter at prices between ~$55 and ~$67. The stock currently trades at $75.59.

Gray Television ( GTN ) : The very small 0.50% GTN stake saw a ~75% increase in Q2 2022 at prices between ~$17 and ~$22. That was followed with a ~45% increase next quarter at prices between ~$16.25 and ~$20.75. The stock currently trades at $7.69.

The spreadsheet below highlights changes to Klarman's 13F stock holdings in Q3 2023:

For further details see: