Seth Klarman’s Latest Stock Picks Include AIG

Page 1 of 2

Copies of Seth Klarman’s book Margin of Safety, published in 1991, have changed hands for up to $1,500 as some market watchers consider the value investor a guru. Klarman manages the Baupost Group, which recently filed its 13F for the fourth quarter of 2012. While the fund’s holdings as of the end of December may be out of date, we think that they’re at least worth considering; we have found that analyzing 13F filings can yield profitable investment strategies, with one example being the fact that the most popular small cap stocks among hedge funds tend to beat the market by 18 percentage points per year (see more details of hedge fund related investing strategies). Of course, if Klarman’s thoughts on investing from 20 years ago are so valuable it’s at least worth a free look at what he thought about the market only a couple months ago. Read on for three things we noticed in the new 13F and check out a history of Baupost’s filings.

The AIG bandwagon. In the third quarter, American International Group, Inc. (NYSE:AIG) had vaulted onto our list of the most popular stocks among hedge funds (see the full top ten list) as a number of hedge funds initiated positions in the stock. Baupost had not reported any ownership of the insurer at the end of September, but the new 13F discloses a position of 7 million shares. There’s certainly a case to be made that AIG is a “margin of safety” stock at a discount of over 40% to the book value of its equity. While we’re skeptical of the quality of AIG’s assets and do not think that it should be trading at book value, we think a smaller discount may be more appropriate. The current-year P/E is also reasonable at 11.

BAUPOST GROUPDumping tech. Baupost completely sold out of Hewlett-Packard Company (NYSE:HPQ), which had been one of its largest holdings three months earlier, and cut its stake in Oracle Corporation (NASDAQ:ORCL) to about 10 million shares from about 14 million. HP has merely proven to be a value trap: it is down 41% in the last year. Revenue fell in its most recent quarter compared to the same period in the previous fiscal year and the market is still much more bearish than the sell-side as analyst estimates actually imply a forward earnings multiple of only 5. The dividend yield at HP is just over 3% for now. Oracle, of course, is more of a software and services company and so it has been on the upswing recently: the stock outperformed the S&P 500 over the last year and net income was up 18% in the fiscal quarter ending in November 2012 versus a year earlier.

Find out which gold stock Baupost was selling, and which it was keeping:

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!