In this article, we will take a look at Seth Klarman Stock Portfolio: 10 Best Stocks to Buy.

Seth Klarman is the CEO and portfolio manager of The Baupost Group. Baupost is an investment manager based in Boston, from where it has been operating since 1982. Klarman is an avowed value investor who calls himself an ardent student of Benjamin Graham, mostly known as the Father of Value Investing, and Warren Buffett, the legendary billionaire investor who used Graham’s principles to transform Berkshire Hathaway from a dying textile factory into a massive $1+ trillion global business conglomerate.

Klarman is also legendary in the investing space because he turned $27 million in seed capital in 1982 into over $22 billion in assets under management as of this writing. His fund has posted average annual net returns of over 20% since its founding. In the past 12 months alone, the fund has returned 36.91%.

According to Klarman, his team at Baupost has achieved this much success because, in his own words, they tend to ask that their investments have a catalyst. He said this on Bloomberg’s Masters in Business podcast on June 18.

“When we lay out a thesis in an investment discussion, it’s very clear not just how undervalued something is, but why it’s going to work,” he told Barry Ritholtz, host of the podcast. He added: “What’s going to drive it? If we can’t make an argument for why it should turn around in the next year or two, it might be nice that it’s trading at a five-year low, but that doesn’t mean it’s not going to be at a seven-year low or even a ten-year low.”

Klarman also believes that the environment must be safe before he puts money on the line. So, when asked by CNBC Anchor Sara Eisen at Global Alts New York on June 12 whether today’s market is in a bubble, he replied that the market does have characteristics of a bubble, but that is not stopping them from finding value amid the frenzy.

The billionaire investor added that the only reason he isn’t too scared to capitalize on the current artificial-intelligence-driven bubble is that “AI could be a genuinely transformative technology.” His only concern is that uncertainty about AI’s ultimate path (winner-take-all vs. many winners, AGI vs. not, effects on jobs and inflation) should logically argue for a lower market multiple. Yet valuations keep climbing, which is what makes him suspect bubble dynamics.

Against that background, this article discusses the stocks Klarman favors.

Our Methodology

To create this list, we scanned through Baupost Group’s Q1 2026 portfolio and picked the fund’s top holdings based on the stake value. We also ensured that the stocks have an upside potential of at least 10%, which was based on Wall Street analysts’ 12-month price targets as of July 3, 2026. We also considered the overall hedge fund sentiment for each stock using Q1 2026 13F holdings data from Insider Monkey’s database. The list is in ascending order of Baupost Group’s stake in each stock.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Insider Monkey’s quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).

Best Seth Klarman Portfolio Stocks to Buy

10. Grupo Aeroméxico S.A.B. de C.V. (NYSE:AERO)

Baupost Group’s Stake Value: $68,371,000

Stock Upside: 54.37%

Number of Hedge Fund Holders: 25

Grupo Aeroméxico S.A.B. de C.V. (NYSE:AERO) is one of the best Seth Klarman portfolio stocks to buy. On June 18, Jefferies initiated stock coverage of Grupo Aeroméxico S.A.B. de C.V. (NYSE:AERO) with a Hold rating and a price target of $20. Alejandro Demichelis, who leads Jefferies’ Latin America equity research team, made the call.

Demichelis and his team pointed to Grupo Aeroméxico’s premium fares and strong international route network as reasons for optimism. These factors give the airline an edge in generating higher revenue per passenger, the analysts noted.

However, the analysts flagged that regulatory limits currently restrict new US-Mexico routes and that domestic competition in Mexico remains intense. They added that the airline’s plans to expand its fleet are limited compared to rival carriers.

Based on the balanced view, Jefferies calculated that Aeroméxico trades at roughly 3.5 times its projected 2027 enterprise value to EBITDAR. In the firm’s view, this level aligns with similar airlines and that it is not a bargain.

This coverage initiation comes roughly seven months after Aeroméxico returned to the New York Stock Exchange; it relisted on November 6, 2025. The airline had previously delisted from public markets to undergo a Chapter 11 bankruptcy restructuring brought on by the COVID19 pandemic.

Grupo Aeroméxico, S.A.B. de C.V. (NYSE:AERO) is a full-service airline carrier headquartered in Mexico City, Mexico. It provides public air transportation services for passengers and cargo.

9. Herbalife Ltd. (NYSE:HLF)

Baupost Group’s Stake Value: $136,305,000

Stock Upside: 60.18%

Number of Hedge Fund Holders: 38

Herbalife Ltd. (NYSE:HLF) is one of the best Seth Klarman portfolio stocks to buy. On June 25, Herbalife International India Pvt. Ltd., a subsidiary of Herbalife Ltd. (NYSE:HLF), and the Indian Institute of Technology Madras, or IIT Madras, inaugurated the Herbalife–IIT Madras Center of Excellence on Plant Cell Fermentation Technology in Chennai. This initiative marks India’s first dedicated facility for translational research in this field.

Herbalife India said in a statement that the center will be a national hub for research, development, and innovation in plant cell fermentation. Broadly, the goal is to establish India as a global leader in sustainable biomanufacturing and next-generation plant-derived wellness products, the company’s statement reads.

The company said the facility combines advanced upstream cultivation systems with downstream processing and metabolomics platforms, which allow researchers to take early-stage lab discoveries and scale them up for real industrial use. Beyond research, the center is also meant to support technology transfer to companies, encourage entrepreneurship and start-ups in the biomanufacturing space, and help build a skilled workforce in this emerging discipline.

Commenting on the initiative, Ajay Khanna, Herbalife India’s Managing Director, said that the initiative will create “opportunities for researchers, students, and innovators to explore new applications of plant-based technologies and contribute to advancements in nutrition science.”

The inauguration ceremony drew senior government and academic figures, including Dr. N. Kalaiselvi, Director General of the Council of Scientific and Industrial Research (CSIR), and Prof. V. Kamakoti, Director of IIT Madras, who attended as chief guests. The guest of honor was Shri Virendra R. Tiwari, Chairperson of the National Biodiversity Authority.

Herbalife Ltd. (NYSE:HLF) is a nutrition company. It develops and sells dietary supplements, protein supplements, personal care products, and sports nutrition products through a multi-level marketing distribution network.