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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 - 06/30/2011

Shares Held - 09/30/2011

Change in shares

Hewlett-Packard Company

HPQ

0

20750000

20750000

BP Plc

BP

5500000

13740950

8240950

Genworth Financial Inc.

GNW

0

10000000

10000000

PDL Biopharma Inc.

PDLI

9262325

15636000

6373675

Novagold Resources Inc.

NG

0

5000000

5000000

News Corp.

NWSA

19050000

21041665

1991665

Theravance Inc.

THRX

12961100

14225961

1264861

My favourite long candidate among above stocks is BP Plc. However I don’t agree with him on News Corp and believe News Corp. is a sell instead of buy.

BP Plc. 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 $7.65 and next year is $8.54. According to consensus estimates, its top line is expected to grow 4.60% in the current year and 6.30% next year.

The Gulf of Mexico spill in 2010 and the proposed Russian Arctic this year has clearly weighed on BP shares YTD. BP is currently trading at 6.32x forward PE and I believe most of the negatives are already priced in at these levels. Going forward I believe risk-rewards are skewed towards and upside. Given BP’s diverse oil and gas portfolio and financial flexibility, I believe it can easily weather any reasonable cost estimates for the spill.

News Corporation is a diversified global media company. The Company operates in six segments: Cable Network Programming; Filmed Entertainment; Television; Direct Broadcast Satellite Television; Publishing, and Other. I believe we are entering another slowdown and News Corp being a media company will be among the first companies to take a hit as advertising spending is cut.

In the long run, I see a big risk to “Old Media” television companies as time spent on prime-time television is decreasing and internet usage (web 2.0 in particular) is increasing. Gadgets like iPads are also a big risk. News Corp dabbled in Web 2.0 business with MySpace but failed miserably. This clearly shows that News Corp (or for that matter any “Old Media” companies) do not have any inherent advantage in “New Media” business and are likely to see tough competition going forward. Further reputation loss caused by the phone hacking scandal will continue to haunt News Corp in the long term and would adversely affect its influence.

In addition to these companies, I would also be keeping a close watch on Hewett Packard as the company is undergoing a turnaround under the new CEO. The company has a lot of positives about the stock high portion of recurring sales, significant cost cutting levers, strong balance sheet, top-notch management, and low valuations. However I would like to see company’s execution under the new leadership for next couple of quarters before forming any investment opinion.

Source: Seth Klarman's Baupost Group Is Increasing Its Position In These Stocks