Seeking Alpha
Profile| Send Message|
( followers)  

Founded in 1982, The Baupost Group, L.L.C. is a Boston, MA-based investment advisory and hedge fund firm. The fund follows “Deep Value” investment style and holds stocks for the long term.

The following is a list of top stocks (by market value) that The Baupost Group, L.L.C. bought in the last quarter, as released in its most recent 13F filing with the SEC.

Stock

Symbol

Shares Held - 03/31/2011

Shares Held - 06/30/2011

Microsoft Corporation

MSFT

0

12000000

BP Plc

BP

0

5500000

Allied Nevada Gold Corp.

ANV

2456398

3378300

Syneron Medical Ltd.

ELOS

1500000

3836071

Central Pacific Financial Corp.

CPF

0

1800000

Aveo Pharmaceuticals, Inc.

AVEO

3525000

4433010

Idenix Pharmaceuticals Inc.

IDIX

0

1255700

I like Syneron Medical and Microsoft from the above stocks.

Syneron (ELOS) makes light-based equipment used for aesthetic procedures such as hair removal, body shaping, and treatment of vascular and pigmented lesions. Syneron’s stock is trading at a valuation of 0.4x EV/Sales, which is very attractive. Its cash position accounts for two-thirds of its equity value. All four analysts covering the company have buy ratings with a median target price of $18 ,which implies approximately 100% upside. I would recommend buying the company from a long term perspective given its market leadership position, continued market share gains and improving margin structure. It is a small cap stock with just $336 mn market cap, and not many fund managers have a position in this one. Things can change for the better once Wall Street starts understanding the story better.

Another stock I would recommend going long on is Microsoft (MSFT). Microsoft is trading at just 8.5x current year (June 12) EPS, which is very attractive. At these levels, I don’t think the market is pricing in any of the positive initiatives the company is taking. Some of the important initiatives that can drive meaningful growth over the next year are the Windows 8 launch, Office 365, which is gaining traction and a successful launch of Nokia's (NOK) WP7 phones. In addition, Microsoft’s excess cash position provides a downside cushion. As valuations of other tech companies reach more reasonable levels due to the market correction, several attractive acquisition opportunities may arise. I think Microsoft offers an attractive risk reward for investors who can hold the stock for the next couple of years.

As for other stocks in the above list, here are some of the specifics about these companies, including a brief description of their businesses and growth expectations (top line and bottom line):

BP Plc (BP) is an international oil and gas company. BP operates its products in more than 80 countries, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products. The Company operates two segments: Exploration and Production and Refining and Marketing. BP's EPS forecast for the current year is $6.97 and next year is $7.44. According to consensus estimates, its top line is expected to grow 15.00% in the current year and 7.20% next year.

Allied Nevada Gold Corp. (ANV) is a mining and exploration company which produces gold as a primary product and silver as a by-product. Allied Nevada's EPS forecast for the current year is $0.51 and next year is $1.82. According to consensus estimates, its top line is expected to grow 45.10% in the current year and 137.40% next year.

Central Pacific Financial Corp. (CPF) is a bank holding company for its banking subsidiary, Central Pacific Bank. Through its bank and subsidiaries, it offers full-service commercial banking with 34 bank branches and 120 automated teller machines located throughout the state of Hawaii. Central Pacific's EPS forecast for the current year is $0.80 and next year is $0.79. According to consensus estimates, its top line is expected to decline 1.80% in the current year and grow 5.70% next year.

AVEO Pharmaceuticals, Inc. (AVEO) is a biopharmaceutical company focused on discovering, developing and commercializing cancer therapeutics. Its product candidates are directed against mechanisms known to be involved in cancer. AVEO 's EPS forecast for the current year is $0.49 and next year is -$2.02. According to consensus estimates, its top line is expected to grow 288.60% in the current year and decline 63.50% next year.

Idenix Pharmaceuticals, Inc. (IDIX) is a biopharmaceutical company engaged in the discovery and development of drugs for the treatment of human viral diseases, with operations in the United States and Europe. The Company’s research and development focus is on the treatment of hepatitis C. Idenix's EPS forecast for the current year is -$0.59 and next year is -$0.56. According to consensus estimates, its top line is expected to decline 8.60% in the current year and grow 79.60% next year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 7 Top Buys of the Baupost Group