Seth Klarman’s Baupost Group disclosed on December 9th that the firm has initiated a 5.65 million shares brand new position in Targacept Inc. (TRGT), which gives the firm 16.92% passive stake in the company. Baupost Group does not own any share in TRGT before the fourth quarter. Seth Klarman might have seen TRGT’s recent decline since the company missed its goal in a medical trial test. Now TRGT is trading at $7.74, losing 72% so far in 2011. Outsiders can still imitate Baupost Group’s transaction at this point.
There are several other hedge funds which had TRGT in the third quarter. Jacob Gottlieb’s Visium Asset Management had the most, with 1.30 million shares in its position. Dmitry Balyasny’s Balyasny Asset Management opened a new position in TRGT during the third quarter and revealed 591 thousand shares.
Seth Klarman’s Baupost Group is the world’s 11th largest hedge fund. Seth Klarman is also the writer of a $1500 book, Margin of Safety, which reflects his views on investing. Klarman was fresh off of graduating from Harvard Business School when one of his professors, Bill Poorvu, asked him to help manage money. Poorvu and his partners, Howard Stevenson, Jordan Baruch and Isaac Auerbach, used their names to create the acronym, Baupost, that became the name of the company. Klarman’s name wasn’t included. Clearly when they hired Seth Klarman, they didn’t want to change the name of the fund to Baupostkl.
Baupost had an initial capital of $27 Million, which was a very large amount of money in 1982. The four founders were planning to split this capital among several money managers, but they literally couldn’t find other conservative money managers. So, SethKlarman was given all that money to manage. And when we say conservative, we really mean it. Seth A. Klarman published his book in 1991.
According to Google Finance, Targacept, Inc. “is a biopharmaceutical company engaged in the design, discovery and development of neuronal nicotinic receptor (NNR) Therapeutics for the treatment of diseases and disorders of the nervous system. The Company’s NNR Therapeutics target NNRs. As of December 31, 2010, it had a number of clinical-stage product candidates and preclinical programs. The Company has two collaborations with the pharmaceutical company, AstraZeneca, one a collaboration and license agreement focused on TC-5214, as a treatment for depressive disorder, and the other is a collaborative research and license agreement focused in cognitive disorders. As of December 31, 2010, the Company’s advanced product candidates included TC-5214, TC-5619, AZD3480 (TC-1734), AZD1446, TC-6987, TC-6499 and Pentad.”