Two months ago we shares Seth Klarman's latest views about the economy. Here is what we wrote:
Seth Klarman is also concerned about runaway inflation and currency collapse. He must have been buying physical gold recently. Here is what he said in his investor letter: “Yet another long-term risk confronts investors: the government’s fiscal and monetary experiments may go awry, resulting in runaway inflation or currency collapse. Bottom-up value investors would not wish to bet the ranch on a macroeconomic view, but neither would they be wise to ignore the macroeconomy altogether. Disaster hedging – always an important tool for investors – takes on heightened significance in today’s unprecedentedly challenging environment. Yet, as this insight is not unique to us, the cost of insurance is high. There are no easy ways to navigate these turbulent waters. But because the greatest risks are of currency debasement and runaway inflation, protection against a currency collapse – such as exposure to gold – and against much higher interest rates seem like necessary hedges to maintain.”
Yesterday Seth Klarman's Baupost filed its latest 13F form. Klarman initiated an $87 Million position in Allied Nevada Gold (ANV). He is definitely worried about inflation and probably thinks the best way to play this is to buy undervalued gold miners. Chuck Royce had more than $180 Million in ANV at the end of December.
Klarman also initiated a very small position in Sycamore Networks (SCMR). Marty Whitman's Third Avenue had nearly $125 Million in SCMR at the end of December.
Baupost also increased PDL Biopharma (PDLI) and AVEO Pharmaceuticals (AVEO) holdings by more than 50%. Jim Simons' Renaissance and Jean-Marie Eveillard's First Eagle had large PDLI holdings. Samuel Isaly's OrbiMed and Brookside Capital are among the holders of AVEO. The table below provides a summary of Klarman's recent activity (See Seth Klarman's holdings at the end of 2010 here):