Every quarter, many money managers have to disclose what they’ve bought and sold, via “13F” filings. Their latest moves can shine a bright light on smart stock picks.
Today, let’s look at investing giant Seth Klarman, who founded the Baupost Group hedge fund company back in 1982. Klarman is a successful investor with a lot to teach us. He sticks to his value-investing principles so much that at times he has a large chunk of his assets in cash, not finding sufficient bargains.
Why should you look at Baupost’s moves? Well, according to the folks at GuruFocus.com, it has averaged gains of close to 20% annually since its inception, far outstripping the S&P 500. The company’s reportable stock portfolio totaled $3.1 billion in value as of Dec. 31, 2012.
So what does Baupost’s latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are American International Group, Inc. (NYSE:AIG) and Microsoft Corporation (NASDAQ:MSFT) calls. AIG looks appealing to some, with its recent P/E ratio near 3 and a forward one near 10. It has cut a deal with HSBC Holdings plc (ADR) (NYSE:HBC) to sell insurance products in Europe and parts of the Middle East, and is introducing its new CorporateGuard insurance in Europe as well,which is designed to protect directors of companies in these days of extra attention to corporate governance. Share buybacks at recent low levels are also very promising.
Among holdings in which Baupost increased its stake was Idenix Pharmaceuticals, Inc. (NASDAQ:IDIX), which is down some 57% over the past year. It has offered some mixed news lately, from a partnership with a Johnson & Johnson (NYSE:JNJ) subsidiary to develop Hepatitis C treatments to a decision to halt development on several other Hep C drugs that didn’t look promising.
Baupost reduced its stake in companies such as Enzon Pharmaceuticals, Inc. (NASDAQ:ENZN) and Oracle Corporation (NASDAQ:ORCL). Late last year, Enzon announced that it was looking into selling off parts or all of itself, and that it was also calling off clinical trials of a prostate cancer treatment. Activist investor Carl Icahn has been a major shareholder in the company.
Oracle, meanwhile, has been shifting its focus from hardware to the cloud computing realm. It has been posting double-digit revenue and earnings growth rates over the past few years. Oracle is buying telecom infrastructure specialist Acme Packet, which has some scratching their heads due to a lot of strong competition in its field and others bullish, due to CEO Larry Ellison often making surprising but effective moves. Oracle is also suing Google Inc (NASDAQ:GOOG) for alleged patent infringement regarding Java.