The Baupost Group's Favorite Stocks
The Baupost Group is one of the largest hedge funds in the world and boasts a terrific stock picking track record. The fund's founder and president is Seth Klarman, one of the most respected value investors in the world. In fact, Klarman has even been called "the Warren Buffett of his generation."
Here is a look at what equity positions the fund was holding at the end of the second-quarter, when investment managers filed their most recent 13-Fs. Here are six of the fund's top positions:
BP (NYSE: BP) - Depending on when Baupost bought into this London-based integrated oil major, it could have been a very profitable position. As of the firm's last 13-F filing, it has a stake valued at roughly $546 million. The stock traded as low as $27.00 in 2010, compared to its current price of just over $40.00. Being early to buy in after the oil spill, however, was a major mistake, as shares are still trading around $20.00 below where they were prior to the spill. Over the last year, BP has risen a little less than 11 percent, under-performing the broader market. Year-to-date, the stock has fallen almost 6 percent. Despite the fallout from the Gulf spill, and a long-term track record that leaves something to be desired, this stock is attractive to many investors due to its dividend yield, which is roughly 4.60 percent.
Hewlett-Packard (NYSE: HPQ) - This stock has been nothing short of a disaster. Many value investors have been burned badly in this name as it appears very cheap, yet prices keep plunging. At the end of the second quarter, Baupost had a $540 million position in the name, which has lost 29 percent over the last year and 65 percent over the last 5 years. While it is not hard to see why Baupost might find the stock attractive, it has been nearly impossible to make money on the long side in HPQ.
Microsoft (NASDAQ: MSFT) - Baupost had a $214 million position in the tech giant as of the end of the second quarter. This has been a very popular stock with value investors and has been a good position in 2012 as the shares have risen nearly 17 percent. At current levels, MSFT also yields around 2.60 percent. On longer time frames, MSFT has been somewhat of a disappointment, but the stock has been rising gently in recent years.
News Corp. (NASDAQ: NWSA) - Baupost owned both the Class A and Class B shares at the end of the second quarter. The total position in the company was valued at $575 million. The stock has been a strong performer coming out of the financial crisis and is up almost 46 percent over the last year. Despite recent shake-ups at the company and the phone hacking scandal which precipitated them, this continues to be a favored name of many value investors.
Oracle (NASDAQ: ORCL) - In recent years, Oracle has been one of the top performing large-cap tech stocks. Shares have risen better than 57 percent over the last 5 years. In 2012, the stock has added more than 24 percent with most of those gains coming since the beginning of July. Valuation still looks attractive in the stock, which is trading at a forward P/E of just 11 and a PEG ratio of roughly 1. At current levels, Oracle is yielding around 0.80 percent. The name is a good vehicle for conservative investors to gain exposure to large-cap tech.
Theravance (NASDAQ: THRX) - This company is much smaller than many of the others that Baupost has large stakes in. Theravance currently has a market-cap of around $2.37 billion and Baupost's position was valued at $323 million at the end of the second quarter, making it the largest single holder of the stock. Over the last year, THRX has added a very healthy 38 percent, including roughly 11 percent in 2011. Given the size of Baupost's position versus the company's market-cap, it is clear that this is a name in which Klarman has a high level of conviction.
Viasat (NASDAQ: VSAT) - Baupost is also the largest holder of this stock by a very wide margin. The hedge fund's $402 million position gives it a better than 24 percent ownership stake in the company. The next largest holder is FPR Partners, which owns just over 9 percent of the company. Clearly this is another name that Klarman has a lot of conviction about. The stock's recent performance, however, has just been okay. The shares are up almost 13 percent over the last year, but are down more than 17 percent in 2012. The company currently has a market cap of $1.66 billion. ViaSat is a provider of high-speed fixed and mobile broadband services, advanced satellite and wireless networks and secure networking systems, products and services.
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