Historic Buying Opportunity with Some Hedge Fund Legends

Fund’s like Seth Klarman’s Baupost—normally closed to new capital—are now making an exception due to the “massive drop in asset prices catalyzed by the novel coronavirus pandemic,” which has sent them on a hunt for capital. This according to a recent article in Institutional Investor. For Baupost, this means “inviting existing investors to add to their positions and weighing the addition of new clients”—for the first time in nearly a decade. The article cites The… Read More

Seth Klarman Defends Value Investing

In a letter to clients, billionaire hedge fund manager Seth Klarman suggested that value investing will have its day in the sun once again. This according to a recent CNBC article. The Baupost CEO said several factors, including the proliferation of passive investing, have “created market mispricings that will soon lead to a pay off for the long underperforming strategy.” “As funds continue to flow into the hands of indexers, stocks not included in prominent… Read More

When Warren Buffett Thanks You for “Client Alpha”

By Justin Carbonneau (@jjcarbonneau) Imagine for a moment you were one of the very first investors in Berkshire Hathaway in 1965 and you’ve stayed committed to Buffett all these years (54 years and counting be exact). You’re meeting him today to profusely thank him for producing the results he has. You say, “Warren, I want to thank you for producing the long-term outperformance over the market you have delivered on my investment. You’ve more than… Read More

Seth Klarman’s Canny Hedge Against Wildfires

Before the California wildfires started last November, billionaire hedge fund manager Seth Klarman’s firm Baupost Group bought 14.5 million shares of PG&E stock, according to an article in Chief Investment Officer, then hedged its bet by purchasing insurance claims against the power company. Baupost’s stake in the power company, worth about $49 a share before the fires started, fell to near $8 in January as a result of the utility’s bankruptcy filing (in the wake… Read More

Seth Klarman’s Bleak Warning Chills Davos

In his 22-page annual letter to investors, Baupost Group’s Seth Klarman warned that increasing political and social tensions around the globe may end in an economic disaster. This according an article in The New York Times that describes the letter as a “warning shot.” “It can’t be business as usual amid constant protests, riots, shutdowns and escalating social tensions,” Klarman wrote in the letter, which was reportedly shared during the annual meeting of the World… Read More

Klarman Warns that Investors are Ignoring Risks

In a private letter to clients, Baupost Group CEO Seth Klarman suggests that, instead of asking themselves why they should sell in today’s market, they should ask whether they can afford not to, according to a recent article in Business Insider. Klarman’s concern, the article says, is that investors are overlooking risks associated with low volatility and stretched valuations, and that “growth stocks—those that represent high quality companies—are appreciating far ahead of value shares, which… Read More

Klarman Warns of Risks to Investors

Risk is the most important consideration when investing, and investors are being too trusting. This according to a recent Business Insider article reporting on a client letter from hedge fund manager Seth Klarman. The hedge fund manager (who oversees approximately $30 billion) shares his view that, when share prices are low (as they were in 2008 and early 2009), risk is “usually quite muted while perception of risk is high.” By contrast, however, he argues that… Read More

ETFs Make Markets Less Efficient Writes Klarman

While exchange-traded-funds have claimed a growing share of investor funds, critics say these funds are “potentially dangerous and untested through a crisis,” says a Bloomberg article from last week. In a recent letter to investors, Baupost Group founder Seth Klarman explains that the dominance of ETFs is making markets less efficient: “The inherent irony of the efficient market theory is that the more people believe in it and correspondingly shun active management, the more inefficient… Read More

Jeremy Grantham, Jonathan Jacobson, Seth Klarman and Jeffrrey Vinik: “Below the Radar” Philanthropy of Top Investors to Social Causes

The Boston Globe profiles philanthropy by leading investors. Jeremy Grantham’s foundations, including the $377 million Grantham Foundation for the Protection of the Environment, reflect a movement toward “making big bets on social change philanthropy,” according to Paul Grogan of the Boston Foundation. This is a shift apparent in Grantham’s own remarks: he noted that giving to traditional recipients of philanthropic dollars (such as arts and medical institutions) is “better than nothing. But it isn’t as… Read More

Fidelity PM Learns from Value Greats like Buffett, Graham and Klarman

Chuck Myers, who heads the Fidelity Small Cap Discovery Fund, shared some of the lessons he has learned as a value investor at the recent CFA Institute Equity and Valuation Conference. As reported in Enterprising Investor, these include: “Learn from the best, but think independently.” Myers cites some of the best known investors, and those with excellent records, as influences, but has developed his own “low expectations” approach to value investing by seeking out-of-favor stocks… Read More