In this article, we discuss the 11 cheap value stocks to buy according to Seth Klarman. If you want to read about some more stocks in the Klarman portfolio, go directly to 5 Cheap Value Stocks to Buy According to Seth Klarman.
Value investors like Seth Klarman of Boston-based Baupost Group have come under increased spotlight in recent weeks as a slowing macro environment pushes the market away from growth towards value offerings. There are few better at value investing than Klarman, who managed a 13F equity portfolio worth more than $5.4 billion at the end of the third quarter of 2022. Klarman enjoys far more fame among elite investors than the general public because he likes to keep a low public profile. His net worth is in excess of $1.5 billion.
The value of the 13F equity portfolio of Baupost Group, which has held stakes in top stocks like Alphabet Inc. (NASDAQ:GOOG), Intel Corporation (NASDAQ:INTC), and Micron Technology (NASDAQ:MU), decreased by about $1 billion between the second and third quarter. During the time, the fund made new purchases in four stocks, additional purchases in seven, sold out of eleven stocks, and reduced holdings in eight stocks. The top ten holdings of the fund comprise more than 70% of the entire portfolio.
Our Methodology
The companies listed below were taken from the investment portfolio of Baupost Group at the end of the third quarter of 2022. Those that have a Price-to-Earnings (PE) ratio of less than 20 and were priced around $100 per share, or less, as of December 26, were preferred for the list. The hedge fund sentiment around each stock was calculated using the data of around 900 hedge funds tracked by Insider Monkey in the third quarter of 2022.
Cheap Value Stocks to Buy According to Seth Klarman
11. Outbrain Inc. (NASDAQ:OB)
Number of Hedge Fund Holders: 13
PE Ratio: 3.57
Share Price as of December 26: $10.19
Outbrain Inc. (NASDAQ:OB) operates an online content recommendation platform worldwide. On December 15, the shares of Outbrain rose as the firm announced a new $30 million stock buyback program, with no requirement to purchase any minimum number of shares. The program may be commenced, suspended or terminated at any time. At the end of the third quarter, Seth Klarman’s Baupost Group owned 792,000 shares worth $2.9 million in Outbrain Inc. (NASDAQ:OB).
On December 13, Citi analyst Ygal Arounian initiated coverage of Outbrain Inc. (NASDAQ:OB) stock with a Neutral rating and $4 price target, noting that the consumer is likely to continue to feel pressure from the macro environment, which has effects on the entire group.
At the end of the third quarter of 2022, 13 hedge funds in the database of Insider Monkey held stakes worth $4.5 million in Cullinan Oncology, Inc. (NADASQ:CGEM), compared to 5 in the preceding quarter worth $5.98 million.
Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Baupost Group is a leading shareholder in Outbrain Inc. (NASDAQ:OB) with 792,000 shares worth more than $2.9 million.
Just like Alphabet Inc. (NASDAQ:GOOG), Intel Corporation (NASDAQ:INTC), and Micron Technology (NASDAQ:MU), Outbrain Inc. (NASDAQ:OB) is one of the top stocks in the portfolio of billionaire Seth Klarman.
10. Cullinan Oncology, Inc. (NASDAQ:CGEM)
Number of Hedge Fund Holders: 16
PE Ratio: 4.67
Share Price as of December 26: $10.24
Cullinan Oncology, Inc. (NADASQ:CGEM) is a biopharmaceutical company that focuses on developing a pipeline of targeted oncology and immuno-oncology therapies for cancer patients in the United States. On November 14, Cullinan Oncology posted earnings for the third quarter of 2022, reporting losses per share of $0.54, beating market estimates by $0.43. The cash and investments of the company as of September 30 were approximately $607 million. At the end of the third quarter, Seth Klarman’s Baupost Group owned 6429,646 shares worth $5.5 million in Cullinan Oncology, Inc. (NADASQ:CGEM).
On November 21, BTIG analyst Kaveri Pohlman initiated coverage of Cullinan Oncology, Inc. (NASDAQ:CGEM) stock with a Buy rating and $20 price target, noting that the company has three clinical-stage assets, all with differentiated targets, that look widely applicable and address billion-dollar market opportunities
At the end of the third quarter of 2022, 16 hedge funds in the database of Insider Monkey held stakes worth $155.9 million in Cullinan Oncology, Inc. (NADASQ:CGEM), compared to 16 in the preceding quarter worth $180.9 million.
Among the hedge funds being tracked by Insider Monkey, San Francisco-based firm Biotechnology Value Fund/BVF Inc is a leading shareholder in Cullinan Oncology, Inc. (NADASQ:CGEM) with 7.5 million shares worth more than $96.3 million.
9. Veritiv Corporation (NYSE:VRTV)
Number of Hedge Fund Holders: 19
PE Ratio: 6.01
Share Price as of December 26: $130.98
Veritiv Corporation (NYSE:VRTV) operates as a business-to-business provider of value-added packaging products and services, as well as facility solutions, print, and publishing products and services in the United States and internationally. On November 28, Veritiv Corp initiated a quarterly dividend of $0.63 per share. The forward yield was 2.23%. At the end of the third quarter, Seth Klarman’s Baupost Group owned 3.4 million shares worth $336 million in Veritiv Corporation (NYSE:VRTV).
On October 13, BofA analyst George Staphos maintained a Buy rating on Veritiv Corporation (NYSE:VRTV) and lowered the price target to $126 from $155, noting that the packaging, paper, and forest products industry has more profitability risks going into the third quarter because of increased recession concerns.
At the end of the third quarter of 2022, 19 hedge funds in the database of Insider Monkey held stakes worth $411.7 million in Veritiv Corporation (NYSE:VRTV), compared to 17 in the previous quarter worth $443.9 million.
Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Baupost Group is a leading shareholder in Veritiv Corporation (NYSE:VRTV) with 3.4 million shares worth more than $336 million.
8. Garrett Motion Inc. (NASDAQ:GTX)
Number of Hedge Fund Holders: 23
PE Ratio: 9.70
Share Price as of December 26: $7.85
Garrett Motion Inc. (NASDAQ:GTX) designs, manufactures, and sells turbocharger and electric-boosting technologies for light and commercial vehicle original equipment manufacturers worldwide. On November 2, the shares of Garrett Motion went up after it was reported that the automotive equipment company is said to be exploring options, including a sale. The company is said to be working with an adviser as it evaluates a potential sale, according to traders. At the end of the third quarter, Seth Klarman’s Baupost Group owned 25.5 million shares worth $181.2 million in Garrett Motion Inc. (NASDAQ:GTX).
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Oaktree Capital Management is a leading shareholder in Garrett Motion Inc. (NASDAQ:GTX) with 68.8 million shares worth more than $489.4 million.
In its Q3 2022 investor letter, Alluvial Capital Management, an asset management firm, highlighted a few stocks and Garrett Motion Inc. (NASDAQ:GTX) was one of them. Here is what the fund said:
“Garrett Motion Inc. (NASDAQ:GTX) has elected to begin paying cash dividends on its convertible preferred shares. Doing so prevents dividends in arrears from further accruing and is a wise use of the company’s free cash flow. I believe the choice to initiate a cash dividend is a tacit admission by the company that the necessary conditions for converting the preferred shares will not be met soon. This is a mild short-term negative, as the complex capital structure will remain in place for now. On the other hand, I am thrilled for us to earn a 9% yield as the company uses its free cash flow to buy back cheap stock and wait for the automotive cycle to turn.”
7. Gray Television, Inc. (NYSE:GTN)
Number of Hedge Fund Holders: 29
PE Ratio: 3.97
Share Price as of December 26: $10.46
Gray Television, Inc. (NYSE:GTN) owns and/or operates television stations and digital assets in the United States. On November 4, Gray Television declared a quarterly dividend of $0.08 per share, in line with the previous. The forward yield was 2.37%. The payable date of the dividend for shareholders of record is late December. At the end of the third quarter, Seth Klarman’s Baupost Group owned 3.3 million shares worth $46.7 million in Gray Television, Inc. (NYSE:GTN).
On November 10, Barrington analyst James Goss maintained an Outperform rating on Gray Television, Inc. (NYSE:GTN) stock and lowered the price target to $15 from $25.
At the end of the third quarter of 2022, 29 hedge funds in the database of Insider Monkey held stakes worth $228 million in Theravance Biopharma, Inc. (NASDAQ:TBPH), compared to 25 in the preceding quarter worth $236.4 million.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Darsanan Capital Management is a leading shareholder in Gray Television, Inc. (NYSE:GTN) with 4.6 million shares worth more than $65.7 million.
Alongside Alphabet Inc. (NASDAQ:GOOG), Intel Corporation (NASDAQ:INTC), and Micron Technology (NASDAQ:MU), Gray Television, Inc. (NYSE:GTN) is one of the top stocks in the portfolio of billionaire Seth Klarman.
6. Liberty Global plc (NASDAQ:LBTYA)
Number of Hedge Fund Holders: 31
PE Ratio: 1.42
Share Price as of December 26: $19.04
Liberty Global plc (NASDAQ:LBTYA) provides broadband internet, video, fixed-line telephony, and mobile communications services to residential and business customers. The stock has outperformed the S&P 500 in the past few days on the back of better-than-expected earnings for the third quarter. At the end of the third quarter, Seth Klarman’s Baupost Group owned 47.85 million shares worth $789.5 million in Liberty Global plc (NASDAQ:LBTYA).
On December 6, Citi analyst Georgios Ierodiaconou maintained a Neutral rating on Liberty Global plc (NASDAQ:LBTYA) stock and raised the price target to $20 from $18, noting that price target was raised after incorporating the third quarter results as well as recent currency movement.
At the end of the third quarter of 2022, 31 hedge funds in the database of Insider Monkey held stakes worth $440.4 million in Liberty Global plc (NASDAQ:LBTYA), compared to 28 in the preceding quarter worth $763.9 million.
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Disclosure. None. 11 Cheap Value Stocks to Buy According to Seth Klarman is originally published on Insider Monkey.