Seth Klarman’s Baupost Group has filed a 13F with the SEC revealing its equity positions at the end of 2014. Klarman’s equity portfolio dipped in value to $5.09 billion at the end of the year from the $5.74 billion invalue it held at the end of the third quarter. The bulk of that change came from a large move away from his former top pick, Micron Technology, Inc. (NASDAQ:MU), which fell from being by far the largest position in his portfolio, all the way down to third. The top five picks detailed below form the bulk of Klarman’s portfolio, representing over 60% of its value.
Baupost Group was founded by Klarman in 1982, and has consistently been one of the top performing hedge funds ever since, with net gains of $16 billion through its first three decades of operation. The fund’s equity portfolio has traditionally represented only a small portion of its assets under management, as the fund focuses instead on value investing and risk management. On that front, Klarman made a move into depressed energy stocks last quarter, with some new positions, and a bold push into his top pick.
That top pick is Cheniere Energy, Inc. (NYSEAMEX:LNG), which Klarman added 2.61 million shares of during the quarter, giving him 13.81 million total. Klarman wasn’t done there, as earlier this year, he also revealed increasing his position all the way up to 24.81 million shares in a 13G filing, adding an additional 11 million shares between the end of 2014 and January 9, 2015. Nor is Klarman the only one making a big move into Cheniere Energy; Andreas Halvorsen’s Viking Global also disclosed a massively increased position in the Houston, Texas-based company recently.
Cheniere Energy, Inc. (NYSEAMEX:LNG) is an interesting study in that it hasn’t been hit tremendously hard by the sinking oil prices. In fact, shares soared 60.91% during 2014, and are up another 9.22% in 2015, which speaks volumes about the overall potential for the business, despite energy prices likely being depressed for some time. Cheniere is in the process of building a liquified natural gas pipeline that will include nine trains to haul gas from its plants to various destinations.
ViaSat, Inc. (NASDAQ:VSAT) is Klarman’s second largest position, and one which remained unchanged during the fourth quarter at 11.53 million shares. ViaSat has been in Klarman’s portfolio for several years, and his position has mostly remained unchanged during that time. While ViaSat has been a successful investment for Klarman overall, it has foundered over the past stretch of nearly two years, down 11.11% since May 24, 2013, a week after shares soared nearly 50% on the news that Boeing Co (NYSE:BA) would build the ViaSat 2.
Micron Technology, Inc. (NASDAQ:MU) falls from 30.82% of Klarman’s portfolio to just 13.55% at the end of the year, as he sold 31.95 million shares of the company that had been his largest position for the past year-and-a-half. Klarman opened the position during the second quarter of 2013, and increased it by 55% the next quarter, to 64 million shares. The entirety of that position was established at rates between $9.50 and $18.00, with shares closing 2014 at nearly 100% above the high end of the range, at $35.01.
While Micron Technology, Inc. (NASDAQ:MU) remains the top pick of David Einhorn’s Greenlight Capital this past quarter, it appears the time may have been right for Klarman to shed his position. Shares are down 7.26% year-to-date, on fears that its memory is falling behind the competition, and that Samsung will dilute the market with an abundance of inventory.
Klarman has made a bigger move into eBay Inc. (NASDAQ:EBAY), increasing his position by 52% during the past quarter with the addition of 3.22 million shares. The online auction giant is in the midst of spinning of its PayPal payment platform into a standalone company, which was pushed by activist investor Carl Icahn.
eBay Inc. (NASDAQ:EBAY) rebounded from a large dip in the middle of October following a disappointing earnings report, in addition to security concerns being unearthed about the company’s flagship auction platform. More recently, it received potentially good news when it was revealed online retail rival Amazon.com, Inc. (NASDAQ:AMZN) plans for drone deliveries had been shot down by the U.S government, at least for now. eBay also revised earnings upwards in early February, sending the stock up slightly for the year.
Lastly is Antero Resources Corp (NYSE:AR), another stock Klarman was bullish on during the fourth quarter. His stake in this stock was increased by 184% during the quarter, to 7.85 million shares, an increase of 5.09 million shares. Unlike Cheniere Energy, Inc. (NYSEAMEX:LNG), Antero is an energy stock that has suffered from the oil price swoon, losing 34.79% of its value in 2014. The stock has rallied 3.33% thus far in 2015 however, as the natural gas and oil exploration company has made a number of hedge plays against oil prices that will shield it from further volatility in 2015.
Disclosure: None
