Klarman, Witmer & Einhorn: Examining 2009 Q1 13F Filings

by: Davy Bui

This quarter's filings are particularly interesting because they encompass the most recent bear market low which occurred in early March. So without further ado, here are my thoughts on the filings for Klarman, Witmer and Einhorn. You can view Baupost's portfolio changes in spreadsheet view using this link:

  • Strangely enough, Klarman did not add a single new equity or option position despite the market plunge in early March. As mentioned many times before, 13F filings are incomplete information and it is possible that Klarman favored credit or foreign stocks over domestic equities but as we'll see later on with Meryl Witmer, he was not the only professional value investor to avoid adding heavily in the first quarter.
  • The most significant change in Klarman's 13F filing is the huge stake building in various CapitalSource securities (NYSE:CSE). The combined equity and debt positions equate to one of Baupost's largest publicly disclosed positions.
  • Baupost divested its stakes in the Diller / Malone media companies [IAC/InterActiveCorp (IACI) & Liberty Media Capital (LCAPA)] as well as significantly reducing its Linn Energy position (LINE), even as it bought more Breitburn Energy Partners LP (BBEP).

If Klarman's relative inactivity during plunging prices was a bit puzzling, Meryl Witmer's activity as shown in her 13F filing strongly resembles complete liquidation. Keep in mind that Witmer often plays in foreign markets but a quick glance at the spreadsheet shows Witmer's firm holding only 3 stocks from last quarter's 13 stocks. The 3 stocks left standing in the Witmer Asset Management filing were Interface (IFSIA), Keryx Biopharmaceuticals (NASDAQ:KERX) and USA Mobility (USMO), with all 3 positions reduced 50% - 77% from Q4 2008. I couldn't find any news that may account for such activity but if readers have some information, please share in the comments.

In contrast to the first two, David Einhorn's Greenlight Capital was actively buying during the first quarter of 2009, as readers can see in this spreadsheet:

  • Einhorn opened 18 new positions, with the three largest non-merger-arbitrage positions being oil producer Hess Corp. (NYSE:HES), failed buyout play Harman International (NYSE:HAR) and transport / logistics play Con-Way Inc. (NYSE:CNW).
  • Greenlight continues to maintain bullish gold positions, adding another 14% to the gold ETF (NYSEARCA:GLD), which is by far their largest position. This does not include Einhorn's bet on the gold miners (NYSEARCA:GDX) which also ranks among Greenlight's largest positions shown in its 13F filing.
  • Einhorn's buying activity far outpaced his selling, with only two notable divestments. He sold out of takeover target CF Industries (NYSE:CF) and reduced his Commscope stake (CTV) by 47%.

You can view other managers' 13F holdings spreadsheets here.

Disclosure: Short BBEP puts