Seth Klarman's Baupost Group: New Positions in ADC Telecommunications (ADCT) & Solar Capital (SLRC) ~ market folly

Monday, May 17, 2010

Seth Klarman's Baupost Group: New Positions in ADC Telecommunications (ADCT) & Solar Capital (SLRC)

(This post is part of our series on tracking hedge fund portfolios. If you're unfamiliar with tracking investments they disclose via SEC filings, check out our series preface on hedge fund filings.)

First up in our hedge fund coverage is Seth Klarman's Baupost Group. Klarman received his MBA from Harvard Business School and went to work for Baupost when he was 25. He has been there ever since and has been one of the most successful investors of our time. We've already covered some of the recent portfolio activity out of Klarman's firm as they exited their Facet Biotech stake (FACT) and were also adding to their Viasat and Theravance positions (VSAT & THRX).

Keep in mind that the positions listed below are by no means representative of Baupost's entire portfolio. Baupost manages around $20 billion and their equity disclosures only account for around $1.7 billion. Klarman typically has a large cash position on hand to make investments when he sees opportunity. Additionally, Baupost has much of its portfolio in distressed assets as of late. However, we do still get a peak as to the equity exposure from one of the greatest investors of this generation. For recent investment insight from him, check out Seth Klarman's lessons from the financial crisis.

The positions listed below were Baupost Group's long equity, note, and options holdings as of March 31st, 2010 as filed with the SEC. All holdings are common stock unless otherwise denoted:

Brand New Positions
ADC Telecommunications (ADCT)
Solar Capital Ltd (SLRC)

Increased Positions
Many of these increases listed below we had previously detailed:
Viasat (VSAT): Increased position by 77.1%
Theravance (THRX): Increased by 28.7%
Theravance (Notes 3.0% 1/1): Increased by 22.89%
Enzon Pharmaceuticals (ENZN): Increased by 13.86%

Reduced Positions
Domtar (UFS): Reduced position by 7.69%
News Corp (NWSA): Reduced by 5.36%
Audiovox (VOXX): Reduced position by 4.65%

Positions With No Change
DirecTV (DTV)
Capitalsource (CSE)
Alliance One International (AOI)
Breitburn Energy Partners (BBEP)
Capitalsource (7.25% Senior Subordinated Convertible Debentures due 2037)
Ituran Location and Control (ITRN)
Liberty Media (LSTZA)
Multimedia Games (MGAM)
Syneron Medical (ELOS)

Positions They Sold Out of Completely
Capitalsource (4.0% Senior Subordinated Convertible Debentures due 2034)
CIT Group (CIT)
Sapphire Industrials (Warrants)
While the 13F filing discloses that Baupost only partially sold their Facet Biotech (FACT) stake, we have already learned that they've exited the position entirely so we are listing FACT here instead.

Top 15 Holdings (by percentage of assets reported on 13F filing)

  1. News Corp (NWSA): 19.3%
  2. ViaSat (VSAT): 17.47%
  3. Theravance (THRX): 10.04%
  4. Domtar (UFS): 9.99%
  5. Breitburn Energy Partners (BBEP): 7.35%
  6. Capitalsource (CSE): 6.57%
  7. Enzon Pharmaceuticals (ENZN): 5.43%
  8. DirecTV (DTV): 3.17%
  9. Capitalsource (Convertible Debentures): 2.66%
  10. Alliance One (AOI): 2.59%
  11. Theravance (Notes): 2.54%
  12. Solar Capital Ltd (SLRC): 2.34%
  13. ADC Telecommunications (ADCT): 2.12%
  14. Ituran Location & Control (ITRN): 1.59%
  15. Liberty Media (LSTZA): 1.33%

So, Klarman starts two brand new positions in ADC Telecom (ADCT) and Solar Capital (SLRC). He sells completely out of CIT Group (CIT), Sapphire Industrials (Warrants) and one of his Capitalsource convertible debentures positions. Since this filing, we've also learned that Baupost has exited Facet Biotech (FACT) as well as the company has been bought out.

Other notable activity includes adding heavily to his stake in Viasat (VSAT), but we had already detailed this as well. So, that really sums up all the major moves from Klarman's firm. He's obviously a value investor so you shouldn't expect a whole lot of turnover in his portfolio anyways. If you want more insight from this investing legend, be sure to check out Seth Klarman's lessons from the financial crisis.

Data used for this article comes from Alphaclone, our source for sorting through all the hedge fund portfolio maneuvers and backtesting the performance (Market Folly readers can receive a special free 30 day trial). Assets reported on the 13F filing were $1.72 billion this quarter compared to $1.58 billion last quarter. Keep in mind that these filings are not representative of the hedge fund's entire base of AUM. This post is part of our hedge fund portfolio tracking series, so be sure to check back daily for our new updates.

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