Here's What This Super-Investor Has Been Buying
Every quarter, many money managers have to disclose what they've bought and sold. Their latest moves can shine a bright light on smart stock picks.
Today let's look at investing giant Seth Klarman, who founded the Baupost Group hedge fund company back in 1982. Klarman is a successful investor with a lot to teach us. He sticks to his value-investing principles so much that at times he has a large chunk of his assets in cash because he can't find sufficient bargains.
Why should you look at Baupost's moves? Well, according to the folks at GuruFocus.com, it has averaged gains of close to 20% annually since its inception, far outstripping the S&P 500.
Baupost's stock portfolio totaled $2.9 billion in value as of March 31, 2012, with just 19 holdings. The top three holdings, making up fully 45% of the portfolio's overall value, were Viasat, BP (NYS: BP) , and Hewlett-Packard (NYS: HPQ) .
So what does Baupost's latest quarterly 13F filing tell us? Here are a few interesting details:
For starters, Klarman didn't add any new holdings to the portfolio, though he did unload some, such as PDL BioPharma (NAS: PDLI) . The company, which collects royalties from a slew of medications, recently yielded 9.2%. The company will remain attractive as long as it's able to add new drugs, since existing ones will eventually have their patents expire. Institutions were recently buying shares heavily, helping propel the stock more than 12% over the past year.
Among holdings in which Baupost increased its stake were Idenix Pharmaceuticals (NAS: IDIX) and NovaGold Resources (NYS: NG) . Idenix is busy working to treat hepatitis C and has been rather volatile, surging on takeover rumors and dropping on good trial results from competing products. NovaGold has been selling off various assets recently in order to focus its operations more, with high hopes for its Alaska-based Donlin mine. It's also issued more shares -- several hundred million dollars' worth -- which has some investors disappointed because of the dilution of existing shares. Some are interested in NovaGold because they see it as a possible acquisition target.
Baupost reduced its stake in several companies, including Hewlett-Packard and BP. Hewlett-Packard's history is littered with embarrassments, such as the Mark Hurd scandal, rapid CEO turnover, an aborted sale of its PC division, and dysfunction in its board of directors (it sports a poor "F" rating in governance from the folks at GMI Ratings). New CEO Meg Whitman plans to merge printer and PC lines, and many investors are choosing to watch and wait. Check out why our analysts think the company is "still dead in the water." Scandal-ridden BP, meanwhile, has many investors spooked by further financial consequences it may face due to its involvement in the big oil spill in the Gulf of Mexico. But with the stock down, many settlements now behind it, active drilling going on, and the company rolling out spill containment kits, some now see the stock as a bargain.
We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing, and 13-F forms can be great places to find intriguing candidates for our portfolios.
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At the time this article was published LongtimeFool contributorSelena Maranjian,whom you canfollow on Twitter, owns shares of PDL BioPharma, but she holds no other position in any company mentioned.Click hereto see her holdings and a short bio. The Motley Fool has adisclosure policy.We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
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