Baupost's Significant Transactions in the Second Quarter

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Includes: ALR, ANV, BP, INVA, MSFT, NWSA, VSAT
by: Zvi Bar

Baupost Group's Seth Klarman is well regarded as one of the better value investors. His margin of safety selections rarely change, and he has written and stated that he, like Warren Buffett, believes the ideal length of time to hold a good investment is forever. Nonetheless, he does sometimes sell out of positions.

According to Baupost's last 13F-HR, during the second quarter of 2011 Mr. Klarman's fund made several large transactions. Some of you may find it interesting to learn what Mr. Klarman is adding and/or reducing exposure to. Below is an explanation of the significant changes Baupost reported. According to the filing, Baupost did not completely sell out of any positions, though several were reduced.

Largest Positions

Baupost's largest position as of the close of the second quarter continued to be Viasat (NASDAQ:VSAT), in which the hedge fund owns about 10 million shares. This investment also represents about 24% of the company. Baupost has owned shares in the satellite communication company for a while and has accumulated shares in recent quarters. Baupost's second largest holding was in News Corp (NASDAQ:NWSA), with slightly more than 19 million shares, now worth about $300 million. Baupost did not buy or sell any shares of either Viasat or News Corp. last quarter.

Baupost did sell about 40 thousand shares of Theravance (THRX), but kept over 12.9 million shares of the biotech. This holding is also one of Baupost's largest, now valued at about $240 million. This position also makes Baupost the largest owner of Therevance, with over 17 percent of the company.

Baupost continued to hold 3.1 million shares of Alere (NYSE:ALR), a medical diagnostic laboratory and research facility. The hedge fund owns about 3,6 percent of the company. The position was worth $113 million at the end of the second quarter, but is now worth about $77.5 million.

New Large Holdings

Baupost made two large new purchases, and both to well-known large caps. The largest new position was in Microsoft (NASDAQ:MSFT). Seth Klarman added 12 million shares of Microsoft in the second quarter. Baupost also added 5.5 million shares of BP plc (NYSE:BP). Both of these large-cap dividend producing companies appear to be made from the value and margin of safety playbook for which Seth Klarman is known, though both have recently gone down in price with the broader market.

While not a new holding, due to the accumulation of about 920 thousand shares of Allied Nevada Gold Corp. (NYSEMKT:ANV), Baupost now has a position in the gold company, worth over $120 million. This investment has not declined with the broader market as its value is largely defined by the price of gold, which has gone up during this recent correction.

Disclaimer: This article is intended to be informative and should not be construed as personalized advice as it does not take into account your specific situation or objectives.

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