2023-08-16 03:00:21 ET
Summary
- Baupost Group's 13F portfolio value decreased from $5.85B to $5.61B this quarter.
- The portfolio is heavily concentrated, with Liberty Global, Liberty Media Sirius XM, ViaSat, Alphabet, and Veritiv accounting for approximately 58% of the holdings.
- New stakes include Amazon, Dollar General, and Union Pacific, while stake disposals include Skyworks Solutions and Fiserv Inc.
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 8/11/2023. 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 Q1 2023.
Baupost Group’s 13F portfolio value decreased from $5.85B to $5.61B this quarter. The total number of 13F securities decreased from 31 to 29. The portfolio is heavily concentrated with Liberty Global, Liberty Media Sirius XM, ViaSat, Alphabet, and Veritiv together accounting for ~58% 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:
Garrett Motion (GTX), Amazon.com (AMZN), Dollar General (DG), and Union Pacific (UNP): Baupost controlled ~32% of Garrett Motion ( GTX ) as of last quarter. The bulk of the ownership was through a series A preferred share offering. They were converted to common stock during the quarter. The stock is now at ~$8. AMZN is a 2.24% of the portfolio position purchased at prices between ~$98 and ~$130 and the stock is now above that range at ~$138. DGEN and UNP are very small (less than 0.75% of the portfolio each) stakes established during the quarter.
Note: The GTX position was reduced to a 2.31% (5.99M shares) ownership stake after the quarter ended at an average price of ~$7.75. This is compared to ~26M shares in the 13F Report.
Stake Disposals:
Skyworks Solutions (SWKS): SWKS was a small 1.42% of the portfolio stake established last quarter at prices between ~$91 and ~$123. The disposal this quarter was at prices between ~$96 and ~$118. The stock currently trades at ~$106.
Fiserv Inc. (FI): FI was a ~1% of the portfolio position purchased in Q4 2021 at prices between ~$96 and ~$111. There was a ~30% stake increase in Q1 2022 at prices between ~$93 and ~$110 while in the next quarter there was a ~11% trimming. Q4 2022 saw a ~45% reduction at prices between ~$94 and ~$106. That was followed with a ~75% selling last quarter at prices between ~$99 and ~$118. The elimination this quarter was at prices between ~$112 and ~$126. The stock is now at ~$123.
DigitalBridge ( DBRG ) previously Colony Capital: The very small 0.25% stake in DigitalBridge came about as a result of the three-way merger of Colony Capital, Northstar Asset Management Group, and Northstar Realty Finance that closed in January 2017. Baupost held stakes in all three of these stocks and those got converted into CLNY shares. Roughly half the position was sold in Q2 2020 at prices between ~$5.70 and $12.40. Q1 2022 saw another ~20% selling at prices between ~$26.40 and ~$33. That was followed with another ~30% reduction next quarter at prices between ~$18 and ~$30. The last quarter saw a ~60% selling at prices between ~$10.50 and ~$15.40. The remainder was sold this quarter. DBRG currently trades at ~$17.
Note: the prices quoted above are adjusted for the one-for-four reverse stock split last August. Their overall cost-basis was ~$50 per share.
Stake Increases:
Fidelity National Information Services (FIS): The 6.60% FIS position was purchased during Q3 2022 at prices between ~$76 and ~$105 and it is now at $55.88. There was a ~250% stake increase during Q4 2022 at prices between ~$57 and ~$85. That was followed with a ~125% increase last quarter at prices between ~$50 and ~$78. This quarter also saw a ~40% increase at prices between ~$52 and ~$59.
SS&C Technologies (SSNC): SSNC is a ~4% 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 last quarter while this quarter there was a similar increase. The stock is now at ~$56.
Willis Towers Watson (WTW): WTW is a 3.78% 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 in the last quarter there was a one-third reduction at prices between ~$220 and ~$257. The stock currently trades at ~$197. There was a minor ~5% stake increase this quarter.
Jazz Pharmaceuticals (JAZZ): The 1.49% position in JAZZ stake was purchased last quarter at prices between ~$134 and ~$161 and it is now at ~$140. There was a ~40% stake increase this quarter at prices between ~$123 and ~$147.
Seagate Technology (STX): The 0.66% STX stake was primarily built this quarter at prices between ~$55 and ~$67. The stock currently trades at $65.50.
Stake Decreases:
Liberty Global ( LBTYK ) (LBTYA): LBTYK is currently the largest position at ~16.40% 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. This quarter also saw a ~5% trimming. The stock currently trades at $19.49.
Alphabet Inc. ( GOOG ) (GOOGL): The large (top five) 8.88% 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. The last quarter saw a ~47% stake increase at prices between ~$87 and ~$109 while this quarter saw a ~30% selling at prices between ~$104 and ~$128. The stock is now at ~$130.
Qorvo Inc. (QRVO): QRVO is a 4.76% 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. The stock is now at ~$100.
New Oriental Education (EDU): EDU is a 2.90% 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 with a similar reduction this quarter at prices between ~$36 and ~$46. The stock is now at ~$51.
Theravance Biopharma (TBPH): TBPH is a 1.37% 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 $10.14.
Note: they have a ~13% ownership stake in the business.
Kept Steady:
Liberty Media Sirius XM (LSXMK): The ~11% LSXMK stake was primarily built in Q3 2020 at prices between $32 and $37. Q4 2020 saw a ~14% stake increase. The four quarters through Q2 2022 saw the position doubled at prices between ~$35 and ~$56. The stock currently trades below the low end of their purchase price ranges at ~$24.
ViaSat ( VSAT ) : VSAT is a large (top five) position at 9.43% 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 $31.23.
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.
Veritiv Corporation (VRTV): VRTV is a 7.44% 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 ~$168.50.
Note: Klarman’s ownership interest in VRTV is ~25%. Earlier this month, the stock popped as they received a $170 per share cash offer from an affiliate of Clayton, Dubilier & Rice, LLC.
Warner Bros. Discovery (WBD): The large 5.64% 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 $13.42. There was a minor ~7% stake increase during Q4 2022 while the last quarter saw a ~19% trimming.
Gray Television ( GTN ) : The very small 0.53% 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 $8.62.
Herbalife Nutrition (HLF): HLF is a small 0.46% of the portfolio stake established during Q4 2022 at prices between ~$12.60 and ~$22.20 and the stock currently trades at ~$16.
Note: They own ~9% of Atara Biotherapeutics (ATRA).
The spreadsheet below highlights changes to Klarman's 13F stock holdings in Q2 2023:
Seth Klarman - Baupost Group's Q2 2023 13F Report Q/Q Comparison (John Vincent (author))
Source: John Vincent. Data constructed from Baupost Group’s 13F filings for Q1 2023 and Q2 2023.
For further details see:
Tracking Seth Klarman's Baupost Group Holdings - Q2 2023 Update