Baupost Group (Seth Klarman): Portfolio Update

by: Market Folly

Baupost Group, the hedge fund ran by Seth Klarman, has filed an amended 13D with the SEC and has disclosed a 30.21% ownership stake in RHI Entertainment (RHIE). The 13D was amended on December 1, 2008 and then again on January 16th, 2009. The fund has increased its position in RHIE to 4,078,332 shares after purchasing an additional 416,633 shares on January 14 for $4.25. Previously, it owned 3,480,299 shares as of its last 13F filing (which shows positions as of September 30, 2008).

Baupost Group has also filed an amended 13G with the SEC and has disclosed a 15.39% ownership stake in Theravance (THRX). The 13G was filed due to its activity on November 30, 2008. It has increased its position in THRX to 8,071,841 shares. It previously had owned 6,269,891 shares back on September 30, 2008.

Additionally, it filed an amended 13G on Acusphere (OTCPK:ACUS) and disclosed a 0% ownership stake. This was due to activity on December 31, 2008 and so the fund has completely sold out of its position. It previously had held 2,600,582 shares.

Lastly, the fund also filed a 13G on Facet Biotech (FACT), disclosing an 11.6% ownership stake. This was due to activity on December 31, 2008. It now owns 2,772,092 shares after previously not showing it in its portfolio. You can view the rest of Baupost Group's portfolio holdings here.

Over the past 25 years, Baupost has seen an annual compound return of 20% and is ranked 49th in Alpha's hedge fund rankings. Klarman has always considered himself a value investor and has been patient through the market turmoil. The past few years it has had nearly half of its $14 billion in assets in cash. But, with turmoil comes opportunity. And, as such, Baupost's cash has been gradually deployed by Klarman and Baupost's 100 employees, leaving it with around a fourth of its assets left in cash.

Klarman's investment process is detailed in his book "Margin of Safety." In it, he lays out a "how-to" on risk-averse value investing. The book is no longer actively printed and is very hard to find. His take on recent market action can be viewed in his recent interview with Harvard Business School. For more information about Klarman, check out our post on hedge fund manager interviews.