In this article, we will discuss the Forget AI: Legendary Value Investor Seth Klarman Is Buying These 5 Value Stocks in 2026. Please visit Forget AI: Legendary Value Investor Seth Klarman Is Buying These 10 Value Stocks in 2026, if you would like to see the extended list and the methodology behind it.
Seth Klarman of Baupost Group
5. Aon Plc (NYSE:AON)
Baupost’s Stake:$248,218,000
Aon Plc (NYSE:AON) is one of the world’s largest insurance brokers, acting as a middleman between large businesses and insurance companies while also offering consulting services around employee benefits, pensions, and risk management. For the full year 2026, the company expects organic revenue growth of mid-single digits or better, and adjusted operating margin expansion of between 70 to 80 basis points — slower than the 90 basis points seen last year.
Aon Plc (NYSE:AON) is tapping the data center boom by expanding its Data Center Lifecycle Insurance Protection Program, with total capacity now reaching $2.5 billion.
Like many other professional services firms, AI has been impacting sentiment — new AI-based insurance tools such as Insurify are creating concerns that brokers could be disintermediated. However, Aon Plc (NYSE:AON) is also using AI internally to boost productivity and operations, launching tools like Aon Broker Copilot and Claims Copilot. In Q1 2026, operating margin improved to 34.1% from 30.9% in Q1 last year. Total debt however as of Q1 is $14.66 billion, and debt-to-EBITDA is approximately 2.6x — slightly above the historically safe range of 2.0–2.5x. The company’s $13.4 billion acquisition of NFP has been creating prolonged integration costs, with the forecasted $175 million in annual synergies not yet having been fully realized.
FPA Crescent Fund stated the following regarding Aon plc (NYSE:AON) in its Q1 2026 investor letter:
“Longtime holding Aon plc (NYSE:AON) is among the world’s leading providers of insurance/reinsurance brokerage and human resources solutions. The company reported slowing organic revenue growth for 2025, which led to a slew of sell side downgrades that pressured the stock price. Aon currently trades at an undemanding multiple of earnings and maintains a long track record of opportunistic acquisitions that have created value for shareholders over time.”
4. Willis Towers Watson (NASDAQ:WTW)
Baupost’s Stake: $259,632,000
Willis Towers Watson (NASDAQ:WTW) is an insurance broker. It sits between large businesses and insurance companies, helping those businesses get the right coverage at the best price.
The stock is down about 20% over the past year amid AI fears that the technology could disintermediate brokers entirely — the market believes AI agents could easily do what Willis Towers Watson’s (NASDAQ:WTW) brokers do. However, bulls say AI fears are overblown because WTW works primarily with businesses on complex, customized insurance needs — a company with 15 golf courses needing property, flood, and liability coverage won’t be served by an off-the-shelf AI solution the way a consumer insuring a car might be. Based on the latest quarterly results, there have been no signs of AI impact on the Risk & Broking segment — client retention remains strong and there is no sign of AI cannibalization whatsoever. Instead, AI is actually helping Willis Towers Watson (NASDAQ:WTW) internally — WTW has reduced post-call reviews by a third, and AI-powered tools have boosted per-rep sales by 50%.
Polen Global Growth Strategy stated the following regarding Willis Towers Watson Public Limited Company (NASDAQ:WTW) in its fourth quarter 2025 investor letter:
“Additionally, we exited our position in Willis Towers Watson Public Limited Company (NASDAQ:WTW). While we believe the company is performing fine from an operational standpoint, we couldn’t justify owning two insurance brokers with the possibility of the insurance industry entering a “soft market” period for the next few years. Should our view on the industry turn more positive we can add to our current position in Aon, the market leader and a company that has historically navigated softer market periods well.”
3. Elevance Health (NYSE:ELV)
Baupost’s Stake: $373,301,000
Elevance Health (NYSE:ELV) is a key holding in Klarman’s portfolio. It is one of the largest health insurers in the US, serving 45.4 million members. The stock has been hammered by rising healthcare costs, disappointing government payment rates, and regulatory pressure. But the recovery appears to be gaining traction. In Q1 2026, revenue and EPS showed growth and the benefit expense ratio — which measures claims costs against premium income — improved to 86.8%, down from 90% in 2025.
A key regulatory cloud also lifted. The Centers for Medicare and Medicaid Services raised its 2027 Medicare Advantage payment rate to levels better than the market expected.
Management responded by raising full-year 2026 adjusted EPS guidance.
Longer term, an aging population, AI-driven cost efficiencies, and an improving regulatory relationship all support the bull case. At a forward P/E of 14.46x and still nearly 30% below its former highs, Klarman appears to be betting the worst is firmly behind this business.
Hotchkis & Wiley Large Cap Fundamental Value Fund stated the following regarding Elevance Health, Inc. (NYSE:ELV) in its Q1 2026 investor letter:
“Elevance Health, Inc. (NYSE:ELV) is one of the largest health insurers, yet it trades at a discount to the broader market despite being a high quality business that grows faster than GDP and returns a significant portion of its cash to shareholders. Q1 performance was weak, driven by disappointing FY26 guidance amid declining Medicaid enrollment and flat Medicare reimbursement rates proposed by the Trump administration. We view these pressures as medium-term noise and believe Elevance has the ability to improve margins over time through benefit adjustments and/or higher premiums.”
2. WESCO International (NYSE:WCC)
Baupost’s Stake $393,159,000
WESCO International (NYSE:WCC) is an industrial distributor serving customers in construction, data centers, utilities, and industrial facilities. Unlike pure manufacturers, it provides electrical, communications, and security products and services all under one roof — making it a one-stop shop for large, complex projects.
Data centers are now the company’s most powerful growth engine. WESCO International’s (NYSE:WCC) data center sales hit $4.3 billion in 2025, up 50% year-over-year, fueled by hyperscale and AI-driven infrastructure demand. The company is embedded across the entire data center lifecycle — from initial power and electrical buildout all the way through connectivity, IT infrastructure, and AI compute environments. This means recurring, sticky revenue rather than one-off contracts.
Scale is WESCO International’s (NYSE:WCC) biggest competitive edge. It operates across more than 50 countries with a distribution network that is extremely difficult to replicate. Its closest rival, W.W. Grainger, focuses more narrowly on industrial MRO, while manufacturers like Hubbell and nVent have deeper supply chain control but lack WESCO’s breadth and reach. No single competitor matches WESCO’s end-to-end capability.
WESCO International (NYSE:WCC) trades at a Price/Sales ratio of 0.57x versus a sector median of roughly 1.8x — meaning the market is pricing it like a low-margin commodity distributor, when in reality it is a high-value distribution network with real pricing power and accelerating growth in one of the hottest infrastructure themes in the market today.
Diamond Hill Mid Strategy stated the following regarding WESCO International, Inc. (NYSE:WCC) in its fourth quarter 2025 investor letter:
“Electrical products distributor WESCO International, Inc. (NYSE:WCC) outperformed in Q4 after reporting solid Q3 results and raising 2025 guidance. Better-than-expected organic growth was driven by its rapidly expanding data center business, which reached nearly 20% of total revenue.”
1. Restaurant Brands International (NYSE:QSR)
Baupost’s Stake: $597,208,000
Restaurant Brands International (NYSE:QSR) has a forward PE of about 17, and the stock is up about 5% so far this year.
Restaurant Brands International (NYSE:QSR) recently posted quarterly results and beat Wall Street estimates for comparable sales. Burger King US, which drove a 5.8% comp increase, while the international business also held up well with a 5.7% comp.
QSR strength is its franchise-heavy mode, which means it enjoys high profit margins while offloading high-revenue but low-margin restaurant operations onto franchisees. Its revenue growth is better than McDonald’s.
However, there are some concerns around its margins, which are thin when compared with peers amid promotions and discount-driven value menus.
In the short term, declining consumer sentiment and geopolitical headwinds could impact the stock. YouGov data found that 66% of people who expect their economic conditions to worsen also plan to reduce eating out.
While we acknowledge the potential of QSR to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than QSR and that has 100x upside potential, check out our report about the cheapest AI stock.
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