Seth Klarman Stock Portfolio: Top 5 Stock Picks

4. Viasat, Inc. (NASDAQ:VSAT)

Value of Baupost Group‘s 13F Position: $492 Million

Number of Hedge Fund Shareholders: 14

Klarman’s Viasat, Inc. (NASDAQ:VSAT) holding was left unchanged during Q3 at 16.3 million shares, a position which has been maintained for two years running. The value of the holding is down slightly during that time as VSAT shares have underperformed the market and remain 60% off their all-time highs reached in May 2019. Hedge fund ownership of VSAT is down by 59% since that Q2 of 2019 and hit a 6-year low in Q3 of this year.

Viasat, Inc. (NASDAQ:VSAT) aims to streamline its business and increase the amount of recurring revenue it generates, which prompted it to sell the majority of its military business to L3Harris Technologies, Inc. (NASDAQ:LHX) for $1.96 billion. The deal will also help Viasat pay for its $6 billion acquisition of Inmarsat Group Holdings without having to take on a mountain of debt. Following the completion of those deals, about 77% of Viasat’s total sales will be of the recurring variety.

Cove Street Capital was bullish on the value of Viasat, Inc. (NASDAQ:VSAT)’s defense business, as it shared in its Q2 2022 Investor Letter:

“Viasat, Inc. (NASDAQ:VSAT) seems to be either our biggest winner or loser every quarter – annoyingly. The much-delayed launch of the first of three next generational satellites will be at the end of this summer and that event should end this yo-yo in the stock and put us on a more sustainable path in the eyes of the world. Oh, and we think the defense business alone is worth nearly 2x the current price of the stock.”