Seth Klarman Sells Facet Biotech (FACT) Shares & His Entire Horizon Lines (HRZ) Position ~ market folly

Thursday, September 10, 2009

Seth Klarman Sells Facet Biotech (FACT) Shares & His Entire Horizon Lines (HRZ) Position

Seth Klarman's hedge fund Baupost Group has sold shares of Facet Biotech (FACT) as detailed in recent SEC filings: a Form 4 and an amended 13D. On September 4th, 2009 Klarman sold 867,532 shares with the bulk of those orders going through at prices of $15.434 and $15.393. The amended 13D now shows Baupost Group (and related entities) owning a 14.2% stake in FACT with 3,506,875 shares remaining. FACT of course was recently subject to a buyout bid from Biogen Idec (BIIB) whereby they would acquire all FACT shares for $14.50 a share in cash. Shares of FACT were trading around $8.79 before the bid and they now trade at around $15.95, currently at a premium to BIIB's offer. On Tuesday, the Facet Biotech Board of Directors came out and deemed Biogen's offer "inadequate." Then on Wednesday, Biogen reiterated their proposal to acquire all the shares at $14.50. Shares of FACT are up 66% year to date. We'll continue to watch these developments with interest as this all comes long after we've covered all the movements relating to Baupost's stake in FACT.

Secondly, Baupost Group filed an amended 13G on Horizon Lines (HRZ) where they disclosed they no longer hold a position. They have completely sold out of the 2,962,029 shares they previously owned as last reported on June 30th. So, they've liquidated this stake sometime over the past 3 months. Shares of HRZ are up over 93% for the year. While shares may be up big this year, this is a losing position overall for Baupost. SEC filings show them building a position of 5 million shares over time between prices of $10-33 per share. They sold some shares between $9-13, but the rest of their sale comes now at a share price of just over $6. This definitely goes down as one of Baupost's misses and shows that even the greatest of investors make mistakes and are indeed human. For all other portfolio changes, you can view Baupost Group's portfolio here.

We track Klarman & Baupost for their 20% annual compounded return and solid investing methodologies. They are one of the select few funds we have included in our Market Folly custom portfolio that is seeing over 20% annualized returns. Head over to Alphaclone to see what positions our portfolio is currently invested in. If you want to learn how to invest like Seth Klarman, then we'd highly recommend picking up his (extremely rare) book, Margin of Safety where he provides a "how-to" on risk averse value investing.

Lastly, in terms of other investment activity, Baupost Group sold PDL Biopharma (PDLI) and also sold out of their Omnova (OMN) position.

Taken from Google Finance, Facet Biotech is "a biotechnology company. The Company is engaged in identifying and developing oncology therapeutics. It has four antibodies in the clinic for oncology and immunologic disease indications, of which two are in phase II and two in phase I. The Company has several investigational compounds in various stages of development for the treatment of cancer and immunologic diseases, three of which it is developing with collaboration partners: two with Biogen Idec and one with BMS. The spin-off of Facet Biotech from PDL was effected on December 18, 2008."

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."

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