Baupost Group (Seth Klarman): Portfolio Update

Includes: CVP, FACT, RHIE
by: Market Folly

(This article now contains updated filing information, which is featured at the end.)

Well, it certainly looks like Seth Klarman's hedge fund Baupost Group has a fondness for RHI Entertainment (RHIE). In late January, we disclosed that Baupost had been buying RHIE and that it had filed an amended 13D on it, disclosing a 30% position. Now, almost three weeks later, we are writing an almost identical post.

Taken from another amended 13D and Form 4 SEC filings, we now see that Baupost Group has a 33.06% stake in RHI Entertainment, with 4,463,534 shares. As per the Form 4, Baupost was buying shares as recently as February 4, where the firm picked up an additional 385,202 shares at $4.28 a share. You can view its entire portfolio, here.

If you're unfamiliar with Baupost, here's what you need to know: Over the past 25 years, Baupost has seen an annual compound return of 20% and is ranked forty-nineth 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 the firms has had nearly half of its $14 billion in assets in cash, but with turmoil comes opportunity. Baupost's cash has been gradually deployed by Klarman and Baupost's 100 employees, leaving the firm with approximately a fourth of its assets left in cash. Klarman's investment process is detailed in his book Margin of Safety, which difficult to find since it is no longer in print. In it, he lays out a "how-to" on risk-averse value investing. 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.

Addendum (February 12, 2009):

In two amended 13G filings with the SEC due to activity on January 31 2009, Baupost now shows:

  • A 16.68% ownership stake in Facet Biotech (FACT) with 3,985,567 shares.
  • A 0% ownership stake in Centerplate (CVP) with 0 shares. It previously held this company and has now completely sold out of its position.