- Seth Klarman, head of Baupost Group, told the hedge fund's investors that the Federal Reserve's response to the 2008 financial crisis sowed the seeds for last year's market slump.
- "A boom based on easy-money policies will inevitably contain the seeds of its own destruction," he wrote in the year-end letter to clients, the Financial Times reported Wednesday.
- He warned that last year's selloff "probably has further to go," and that there's the potential for a sovereign debt crisis.
- The volatile market helped Baupost's 2022 performance, with it netting $1.6B from its hedging and helped to counter losses in its stock portfolio that included Alphabet ( NASDAQ: GOOG ) ( NASDAQ: GOOGL ), Meta ( NASDAQ: META ), and Just Eat Takeaway ( OTCPK:JTKWY ) ( OTCPK:TKAYF ).
- The letter said the hedge fund posted a single-digit decline last year, outperforming S&P 500's 20% decline .
- SA contributor John Vincent focuses on tracking Baupost Group's Holdings.
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Baupost's Klarman blames Fed response to 2008 crisis to for '22 volatility