Latest Peek Inside the Portfolios of Klarman, Witmer, Third Ave.

In reference to the 1Q08 13F-HR filings of Baupost, Witmer and Third Avenue.

Seth Klarman’s Baupost filing is once again littered with SPACs but there are some interesting items to note:

• Substantial new position in Wellpoint (WLP): Not to be confused with Wellcare (WCG), which Bruce Berkowitz and Mohnish Pabrai (piggybacking off Berkowitz) own. I have a few of the health insurers (UNH, HUM, WCG) on my watchlist ever since the mass sell-off a few months ago but to be honest, health insurers are outside my circle of competence and I haven’t put in the time to research the industry or the companies.
• Opened a position in International Paper (IP) to complement Baupost’s big stake in Domtar (UFS), to which they added 74% more shares. Klarman hearts paper companies, it seems.
• In another reminder that piggybacking can be dangerous to your health, Baupost sold off their massive stake in Sallie Mae (SLM), which just last quarter was a huge position for them. It goes to show you that you must do your own due diligence.

Meryl Witmer’s filing is less busy but interesting nonetheless.

• In Q4 2007, Witmer added 4 new positions (MER, IR, MHK, TT) and in the current quarter, sold off 3 of them, keeping only Mohawk Industries (and upping stake by 60%, making it her largest position). It makes me wonder if my script is working correctly but if it is, looks like Witmer was playing around with merger arbitrage (IR, TT).
• I’m not sure what the deal with the Merrill Lynch position was but just goes to reinforce that piggybacking without doing your own research is a bad idea.
• Interesting to see that she did not increase her holdings of American Eagle Outfitters (AEO), despite the sharp drop from her entry price. Perhaps my take on AEO is the right one.
• Strange little position opened in Keryx Biopharmaceuticals (KERX). Don’t really know what to make of it.

Martin Whitman’s Third Ave Management is always a laundry list of stocks. A few quick points jumped out at me:

• Third Ave opened some small bearish positions against China & Emerging Markets via FXP and EEV.
• They still love them some financials, with increased positions in Ambac and MBIA (MBI) as well as other financial services companies.

Gory details available from the links below:

• Baupost Group Q1 2008 13F-HR Breakdown
• Witmer Asset Mgmt Q1 2008 13F-HR Breakdown
• Third Avenue Mgmt Q1 2008 13F-HR Breakdown

Comments

[oldstockanalyst]

Davy: I track Witmer's holdings too, as well as the holdings of 30+ other professional value investors with good track records. But I always do my own research on the stocks that they buy, and then I make up my own mind based on the research. Witmer hasn't added to her company's AEO holdings, but she hasn't reduced her holdings in it much either. I like AEO as a value play over the next 3 years. I also like Office Depot (ODP), Ann Taylor (ANN), and Collective Brands (PSS) in the retail sector. Thanks for the good article.