Baupost Group Files 13D on Viasat, Joins Board

Seth Klarman's investment firm Baupost Group has filed a 13D with the SEC regarding its stake in Viasat (VSAT).  Per the filing, Baupost owns 23.06% of the company with over 13.73 million shares.  This ownership stake amount is unchanged from the end of the second quarter.

In the filing, Baupost notes they recently were invited to join the company's board in a non-voting capacity.

In a press release issued by the company, they noted: 

“As a decade-long investor in Viasat, we remain excited about the Company’s growth potential in both its defense and commercial businesses,” said Greg Ciongoli, partner, The Baupost Group. “We appreciate this opportunity to contribute to boardroom discussions.”

“Baupost has a successful long-term philosophy of value investing,” said Mark Dankberg, chairman and CEO, Viasat. “Inviting Baupost to participate as a Board observer provides us with an opportunity to capitalize on their strategic insight, as well as their valuable financial and investment expertise.”

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.

Seth Klarman's Baupost Group Discloses New Positions (13F Filing Q4 2009)

This is the fourth quarter 2009 edition of our hedge fund portfolio tracking series. Before beginning, check out our series preface on hedge fund 13F filings.

Fittingly, we'll begin our coverage of fourth quarter holdings with arguably the most successful and respected modern hedge fund manager, Seth Klarman and Baupost Group. Klarman received his MBA from Harvard Business School and went to work for Baupost when he was 25. The rest is history as he has been one of the most successful investors of our time in terms of performance. Prior to this portfolio update, we had already covered Baupost's sale of RHI Entertainment (RHIE) and reduction in their Syneron Medical position (ELOS).

The positions listed below were Baupost's long equity, note, and options holdings as of December 31st, 2009 as filed with the SEC. Note that we are only covering the major portfolio maneuvers and all holdings are common stock unless otherwise denoted.


New Positions (Brand new stakes they initiated last quarter):
CIT Group (CIT)
DirecTV (DTV)
Liberty Media (LSTZA)


Increased Positions (Positions they already owned but added shares to):
Enzon Pharmaceuticals (ENZN): Increased by 290% ~ we covered the addition of this position before
Viasat (VSAT): Increased by 61.4%
Capitalsource (CSE): Increased by 15.4%
Theravance (THRX): Increased by 11.8%


Reduced Positions (Stakes they still own but sold shares in):
Sapphire Industrials (FYR.UN): Reduced by 63.7%
Syneron Medical (ELOS): Reduced by 28.4%
Domtar (UFS): Reduced by 10.3%
Capitalsource (SDCV 4% 7/1 Notes): Reduced by 2.9%
News Corp (NWSA): Reduced by 0.6%


Removed Positions (Positions they sold out of completely):
BPW Acquisition Corp (BPW)
Enterprise Acquisition Corp (EST)
Global Consumer Acquisition (GHC)
Liberty Media (LMDIA)
Prospect Acquisition Corp (PAX.UN)
RHI Entertainment (RHIE) ~ we detailed this right after it happened
SP Acquisition (inactive)
TM Entertainment & Media
Tremisis Energy (TGY.UN)
Overture Acquisition (NLX)


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

1. News Corp (NWSA): 21.1%
   
2. Domtar (UFS): 10.1%
   
3. Viasat (VSAT): 9.86%
   
4. Capitalsource (Convertibles 4% 7/1): 9.7%
   
5. Theravance (THRX): 8.33%
   
6. Breitburn Energy Partners (BBEP): 5.68%
   
7. Enzon Pharmaceuticals (ENZN): 5.37%
8. Capitalsource (CSE):5.08%
9. CIT Group (CIT): 4.5%
10. Facet Biotech (FACT): 3.88%
    
11. DirecTV (DTV): 3.4%
    
12. Capitalsource (Note 7.25% 7/1): 2.75%
    
13. Alliance One (AOI): 2.71%
    
14. Theravance (Note 3.0% 1/1): 2.06%
    
15. Ituran Location & Control (ITRN): 1.39%
    

The main thing to takeaway from this filing is that this is only a small portion of Baupost's overall portfolio. They are currently in many distressed and more illiquid plays and we can't see them since they aren't required to disclose them publicly. Overall, the holdings listed above represent just over $1.5 billion in investments while Baupost manages a much larger asset base and also typically keeps a high amount of cash handy. Please note that in past Baupost updates we had combined all their Capitalsource exposure into one aggregate figure. This time we've instead separated it out by asset class as they own equity, notes, and convertibles.

Baupost's new equity acquisitions include CIT Group (CIT), DirecTV (DTV), and Liberty Media (LSTZA). Keep in mind though, that their stakes in DTV and LSTZA were actually a result of a Liberty Media transaction as Baupost owned the prior entity. Not to mention, while they show a new position in CIT Group, it was most likely a result of a debt to equity conversion, but there's no way to tell for sure. Additionally, they added to existing positions in Viasat and Enzon Pharmaceuticals. They sold completely out of a plethora of acquisition companies and notably reduced their stake in Sapphire Industrials. That really wraps up the majority of their activity.

In terms of other recent movements, we previously learned they will be buying more Facet Biotech (FACT) and rejecting Biogen Idec's takeover offer. For past resources on Klarman and Baupost Group, check out Klarman's interview from the annual Graham & Dodd breakfast, as well as some of his past investment insight,

Baupost is one of the select few funds we have included in our Market Folly hedge fund portfolio replicator that has backtested 25% annualized returns. Head over to Alphaclone to see the hedge fund portfolio replication in action.

Assets from the holdings reported in the SEC 13F filing were $1.58 billion this quarter compared to $1.35 billion last quarter. Please keep in mind that when we reference percentage of portfolio, we are referring to the percentage of assets reported on the 13F filing. Since these filings only report longs (and not shorts or cash positions), these percentages are undoubtedly different than in their actual hedge fund.

This is just one of the 40+ prominent funds that we'll be covering in our fourth quarter 2009 hedge fund portfolio tracking series, so check back daily.

Hedge Fund Baupost Group: New Enzon Pharmaceutical Stake (ENZN)

Seth Klarman's well known hedge fund Baupost Group recently filed two separate 13G's with the SEC in which they updated positions. Firstly, we see that Baupost Group has initiated a brand new position. In a 13G filed due to activity on October 31st, 2009, we see that they have disclosed a 13.7% ownership stake in Enzon Pharmaceuticals (ENZN) with 6,228,130 shares. When we covered Baupost's portfolio via their 13F filing that summarized their positions as of June 30th, Enzon was not present. As such, they have started a new position in this name over the past four months. Interestingly enough, Enzon also recently announced they have agreed to sell their specialty pharma unit for $327 million.

Secondly, we also see that Baupost has disclosed a 14.72% ownership stake in Viastat (VSAT) with 4,652,631 shares. The filing was made due to activity on October 31st, 2009 and they have increased their position by over 278% as they previously held 1,229,057 shares back on June 30th of this year. So, in the past four months or so, Klarman has added 3,423,574 additional shares. Stay tuned next week as we'll be covering the new wave of portfolio disclosures hedge funds will be filing with the SEC (form 13F). This will be our first in-depth look at portfolios since June 30th, and we'll get a better feel as to what these funds have been up to. In the mean time, check out our coverage of Baupost's recent activity where we detailed their other portfolio moves as well as their sale of PDL Biopharma.

We track Baupost Group 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 by combining 3 hedge fund portfolios into a cohesive whole. Head over to Alphaclone to see the hedge fund portfolio replication in action and to see which positions our portfolio is currently invested in (and will soon re-balance to). And if you want to learn how to invest like Seth Klarman, then we'd highly recommend picking up his very hard to find book, Margin of Safety where he provides a "how-to" on risk averse value investing.

Taken from Google Finance, "Enzon Pharmaceuticals, Inc. (Enzon) is a biopharmaceutical company focused on developing, manufacturing and commercializing of medicines for patients with cancer and other life-threatening conditions. The Company has a portfolio of four marketed products: Oncaspar, DepoCyt, Abelcet and Adagen. Enzon’s drug development programs utilize several approaches, including its PEGylation technology platform and the Locked Nucleic Acid (LNA) technology. The PEGylation technology was used to develop two of the Company’s products, Oncaspar and Adagen, and has created a royalty revenue stream from licensing partnerships for other products developed using the technology. The Company also engages in contract manufacturing for several pharmaceutical companies. The Company operates in three segments: Products, Royalties and Contract Manufacturing."

"ViaSat, Inc. is a producer of satellite and other wireless communications and networking systems to government and commercial customers. The Company is organized principally in three segments: government systems, commercial networks and satellite services. The Company’s government systems business is focused on network-centric government communications, where it develops and produces systems and specialized equipment for government customers for tactical data links, unmanned aerial vehicles, secure networking, signal processing and generation, and satellite communications applications. In its commercial networks segment, the Company develops and produces systems and products for consumer, enterprise and mobile (aviation and maritime) broadband customers. Its satellite services segment provides managed network satellite services to enterprise and mobile broadband customers."