The Baupost Group

I just read the book "Margin of Safety" written by Seth Klarman.
It is a masterpiece. I was really fascinated.

He is one of few hedge fund managers who is focused on value investing.

Does anyone know more details about him and his firm?..

Is he really only focused on value investing for the long term and not on short/long?

Can a value investor be a hedge fund manager?

 

You're probably trolling but what the hell, I'll bite.

Seriously? There are tons of value investing hedge funds, most of which are long/short funds. I fail to see how shorting comes into the equation, though I understand Klarman's point on the subject. Baupost is incredibly selective.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
 

I don´t get it why so many people think that I am trolling in this thread. This question may sound dumb because you already work on the wallstreet. HF is an extrinsic term because there is no HF in Germany due to a strong regulation.

I was just curious because value investing is focused on "margin of safety" to reduce the risk, but short/long are riskier investment objects, so I thought whether Seth Klarman also invests by shorting/longing as value investor.

I may lack the coherence between value investing and short/long (value investing could content short/long, too?!?!).

I have no intension to work there, so the selectivity of his firm was not my main question.

 

Baupost isn't a L/S firm. They're a deep value/event-driven fund if you're looking for a style. Value investing principles like those in his book underpin his investment style but that doesn't mean he holds on to a company forever. He simply buys exceptional value when he sees it and sells it once it has returned to fair or better value (or proves to be a value trap). Most of the shorting the firm does is probably related to risk arbitrage trades.

 
GoodBread:
Baupost isn't a L/S firm. They're a deep value/event-driven fund if you're looking for a style. Value investing principles like those in his book underpin his investment style but that doesn't mean he holds on to a company forever. He simply buys exceptional value when he sees it and sells it once it has returned to fair or better value (or proves to be a value trap). Most of the shorting the firm does is probably related to risk arbitrage trades.

Under this metric, would greenlight be a L/S firm because they short stocks? And would paulson advantage fund be considered deep value/event-driven?

 
Brady4MVP:
GoodBread:
Baupost isn't a L/S firm. They're a deep value/event-driven fund if you're looking for a style. Value investing principles like those in his book underpin his investment style but that doesn't mean he holds on to a company forever. He simply buys exceptional value when he sees it and sells it once it has returned to fair or better value (or proves to be a value trap). Most of the shorting the firm does is probably related to risk arbitrage trades.

Under this metric, would greenlight be a L/S firm because they short stocks? And would paulson advantage fund be considered deep value/event-driven?

I guess I'm just saying Baupost doesn't fit under your typical Jones model L/S definition which a lot of Tiger cubs seem to fall into. Greenlight doesn't either although they seem a little less eclectic than Baupost. Paulson is also pretty hard to categorize. They went from merger arb to a bit of everything although risk arb/distressed seems to be a big theme along with their big L/S plays (banking...).

 

I don't think I would put any type of label on Baupost, be it L/S, event driven, or deep value. He has consistently made money in different asset classes, being long or short, while holding a ton of cash. If I had to think of a name for Baupost's style it would be "Really Fucking Smart."

All of that being said, his two big buys last quarter were Microsoft and BP. I don't think I would call either of those even driven or deep value plays. They are cheap stocks with great cash flow. They are both out of favor and the markets may very well be excessively discounting them. I would consider both great value plays.

 

Wow. That PDF is really easy to find. Good thing I didn't download it, which would be wrong.

Bumping this because we are currently buying something from Baupost and I know nothing about them. Does anyone have any insight? Sounds like a great shop.

LinkedIn profiles show an affinity for Morgan Stanley IB

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Fill the unforgiving minute with 60 seconds of run. - Kipling
 
Gene Parmesan:

Bumping this because we are currently buying something from Baupost and I know nothing about them. Does anyone have any insight?

Yeah. Here's an insight: They bought the real estate asset in question based on (a deep discount to) replacement cost and you are buying based on (expensive) cap rates.

Guess which method makes more money with less risk?

EDIT: Just so you realize that I'm not an ass. This is from Sam Zell (hopefully you've heard of him, since you're doing real estate) last week. http://globaleconomicanalysis.blogspot.com/2015/12/sam-zell-warns-reces…

I don't think that I've ever bought or sold real estate . . . I've sold real estate based on cap rates, I don't buy real estate based on cap rates. There's nothing more relevant than replacement cost. You can generate values that are way above replacement cost by virtue of very low cap rates, and that's a sucker's bet.
 

Good post and I don't disagree with you. We're actually buying at around 40% below replacement cost ($120 PSF) but Baupost snagged it a few years ago at like $90 PSF. They put some money in to it but haven't been able to do much on the leasing front

In his book Klarman consistently refers to being a Value Investor and not a Speculator. This consists of of three steps (as defined by Howard Marks):

(1) Decide on an accurate underlying value (2) Pay less than that (3) Don't be wrong

I mean, it's not super complicated.

Fill the unforgiving minute with 60 seconds of run. - Kipling
 
Gray Fox:
xerox has this awesome machine that scans documents and automatically puts them into PDF
that's sick! you must work at a pretty fancy place dood.
"After you work on Wall Street it’s a choice, would you rather work at McDonalds or on the sell-side? I would choose McDonalds over the sell-side.” - David Tepper
 

You won't be able to find a new Baupost letter online because the team are very secretive and scour the internet. If they find a copy out there, they will request a takedown immediately. The only thing I have is the compilation of old notes.

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