Seth Klarman's Baupost Group Sells PDL Biopharma (PDLI) ~ market folly

Monday, August 10, 2009

Seth Klarman's Baupost Group Sells PDL Biopharma (PDLI)

Recently, Seth Klarman's hedge fund filed a flurry of 13G's and we're back again as always to track the latest developments out of Baupost Group. Both documents were filed due to Baupost's activity on July 31st, 2009. Firstly, they've filed an amended 13G on Horizon Lines (HRZ). They are now showing a 7.28% ownership stake in the company with 2,199,129 shares. This is down from their previous 3,641,545 shares that they disclosed owning in their previous 13F filing.

Secondly, they've filed an amended 13G on PDL Biopharma (PDLI). In the filing, we learn that Baupost Group now has a 0% ownership stake in PDLI with 0 shares. In other words, they've completely sold out of this position. Previously, Klarman's fund owned a sizable stake in PDLI as it was their 3rd largest holding when we covered Baupost's portfolio. From their 13F filing that detailed positions as of March 31st, 2009 Baupost owned 15,559,608 shares. New 13F filings are due out this and next week so we'll get an update on the rest of Baupost's positions. They were definitely out selling the two names mentioned above though. Klarman's fund has been pretty busy lately as we also covered them selling their Omnova (OMN) position.

Remember that Baupost's insane long-term track record is a major reason they've landed in our custom Market Folly portfolio that is seeing 25.8% annualized returns. We cloned our portfolio based on multiple hedge fund managers with the help of Alphaclone and Klarman was an easy choice because he is the definition of a value sleuth. And the fact that Baupost has seen annual compounded returns of 20% over the course of 25 years doesn't hurt either.

Klarman started working at Baupost at age 25 after receiving his Harvard MBA. Baupost Group was ranked 13th in the recent 2009 hedge fund rankings. Klarman has been patient through the market turmoil and had nearly half their $14 billion in assets in cash. But, with crisis sprouts opportunity. And as such, Klarman has begun deploying their dry powder, leaving them with around a fourth of assets left in cash. To learn more about his investing ways, check out the now out of print book that Klarman has authored, Margin of Safety.

Taken from Google Finance,

Horizon Lines is "a container shipping and integrated logistics company. The Company's subsidiaries include Horizon Lines, LLC (Horizon Lines), Horizon Logistics Holdings, LLC (Horizon Logistics) and Horizon Lines of Puerto Rico, Inc. (HLPR). The Company owns or leases 21 vessels, 16 of which are qualified Jones Act vessels, and approximately 20,800 cargo containers.The Company ships a spectrum of consumer and industrial items ranging from foodstuffs (refrigerated and non-refrigerated) to household goods and auto parts to building materials and various materials used in manufacturing."

PDL Biopharma is "engaged in the business of management of its antibody humanization patents and royalty assets, which consist of the Company’s Queen et al. patents and license agreements with several biotechnology and pharmaceutical companies."

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