Seth Klarman's Baupost Group Buys More RHI Entertainment (RHIE) ~ market folly

Monday, February 9, 2009

Seth Klarman's Baupost Group Buys More RHI Entertainment (RHIE)

Well, it certainly looks like Seth Klarman's hedge fund Baupost Group has a fondness for RHI Entertainment. In late January, we disclosed that Baupost had been buying RHIE and had filed an amended 13D on it, disclosing a 30% position. Fast forward a few weeks later and we are now writing a nearly identical post.

Taken from another amended 13D and Form4 SEC filings, we now see that Baupost Group has a 33.06% stake in RHI Entertainment (RHIE) with now 4,463,534 shares. As per the Form 4, Baupost was buying shares as recently as 2/4/09, where they picked up an additional 385,202 shares at $4.28 a share. You can view their most recent portfolio updates here, as well as their portfolio in its entirety.

If you're unfamiliar with Baupost, then here's what you need to know: Over the past 25 years, Baupost has seen an annual compound return of 20% and is ranked 49th in Alpha's hedge fund rankings. Klarman has always considered himself a value investor and has been patient through the market turmoil. The past few years they have had nearly half their $14 billion in assets in cash. But, with turmoil comes opportunity. And, as such, Baupost's cash has been gradually deployed by Klarman and Baupost's 100 employees, leaving them with around a fourth of assets left in cash. Klarman's investment process is detailed in his book Margin of Safety. In it, he lays out a "how-to" on risk-averse value investing. The book is no longer actively printed and is very hard to find. His take on recent market action can be viewed in his recent interview with Harvard Business School. For more information about Klarman, check out our post on hedge fund manager interviews.

Taken from Google Finance,

RHI Entertainment, Inc. "develops, produces and distributes new made-for-television movies, mini-series and other television programming worldwide. The Company also selectively produces new episodic series programming for television."

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