Just finished reading Margins of Safety on a friend's recommendation and decided to do a quick research on Seth Klarman and The Baupost Group. I'm still quite unsure regarding what these guys can invest in. Their investment holdings include blue-chip names like Microsoft, distressed debt in Puerto Rico and Iceland, and real estate. If anyone has some thoughts on the following:
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Is there a typical style / strategy that you would categorise Baupost, i.e. event-driven, distressed, L/S, multi-strat? Any other hedge funds that invest in such a broad range of securities and asset class?
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Are investment analysts there generalists who conduct research on all asset classes or are they placed in a specialisation?
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How is the fund structured, in terms of PMs, platforms? Does everything go through Klarman?
Just curious to learn more about this topic, since this guy is definitely one of the smartest investors out there.
They are long-biased value investors that are agnostic with respect to asset class and geography. They invest in private and public markets, across equities, distressed corporate debt, structured credit, real estate, and derivatives. The goal is to find investments with limited prospects for losing capital, that are likely to be 'misunderstood,' and making fairly concentrated bets. They also make certain highly asymmetric bets that can potentially be worth nothing, but have the potential for a large payout (think out-of-the-money interest rate options, CDS on subprime) There are definitely other HFs that invest in this way (including Baupost spin-offs, such as Abrams). Third Point and Appaloosa are similarly opportunistic, although each is different in its own way. Third Point does a lot more activism and short-selling, while Appaloosa might do more 'trading' and macro investments, for example. The general theme is to be opportunistic, concentrated, and look for great investments wherever possible.
Analysts are split between public, private, real estate (possibly more) and generalist with respect to industry. Analysts are typically separated by 'opportunity' (spin-offs, distressed, etc.), not industry, I believe.
Not sure, but there are people who head their different verticals (public, private, real estate, etc.) that function like PMs to an extent.
Rushed this a bit, so apologies in advance for grammar/typos.
You can read about this in their Form ADV: https://www.adviserinfo.sec.gov/IAPD/Content/Common/crd_iapd_Brochure.a…
This is a good find. Thanks a lot!
Great link; it provides much more detail than my post.
I will note your description in 1 describes DK to the letter.
I a know guy in the real estate team, they are coming from real estate backgrounds but more mega fund/top 50 REPE re roles and appear to be solely focused on RE.
Any idea on comp?
I’m pretty sure their mandate is just lose money
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