"Tracking Seth Klarman’s Baupost Group Holdings – Q2 2015 Update"
"Seth Klarman’s US long portfolio increased from $5.95B to $6B this quarter.Baupost Group significantly increased Pioneer Natural Resources, Cheniere Energy, PBF Energy, and Keryx Pharmaceuticals.The portfolio continues to be heavily concentrated with the top-three positions accounting for ~39% of the entire US long portfolio.This article is part of a series that provide an ongoing analysis of the changes made to Baupost Group's U.S. stock portfolio on a quarterly basis. It is based on Klarman’s regulatory  filed on 08/13/2015. Please visit our  article for an idea on how his holdings have progressed over the years and our  highlighting the fund's moves during Q1 2015.Baupost Group’s US long portfolio increased marginally from $5.95B to $6B this quarter. The total number of 13F securities held increased from 28 to 32 as they added several very small positions. The portfolio is heavily concentrated with Cheniere Energy, ViaSat Inc., Pioneer Natural Resources, eBay Inc., and Micron Technology together accounting for around 54% of the 13F holdings.Since inception (1982), Baupost Group’s US long portfolio has accounted for between 2.4% to 15% of the Assets Under Management (AUM). The current allocation is at the high-end of that range. The rest of the AUM is diversified among cash, debt, real estate, and hedges. The fund continues to hold well over a quarter of the AUM in cash. Seth Klarman’s distinct investment style is elaborated in his 1991 book “”: the book is out-of-print and copies sell for a huge premium.New Stakes:Biotie Therapies (BITI), Frontier Communications (FTR) & PFD CNVTs, and Sanchez Energy (SN): These are very small stakes established this quarter. Although the relative sizing is small, it is very significant that Baupost controls ~13% of BITI.Stake Disposals:None.Stake Increases:Cheniere Energy (LNG): LNG is Klarman’s largest 13F position at 17.74% of the US long portfolio. The original stake was established in Q1 2014 at prices between $41 and $55. In Q3 2014, it was increased by ~87% at prices between $70 and $84 and that was followed by another 23% increase the following quarter at prices between $62 and $80. This quarter saw a further ~11% increase at prices between $68.49 and $80. The stock currently trades at $68.30. The large stake build-up indicates a clear bullish bias.Note: Klarman also has a ~10% ownership interest in Liquefied Natural Gas Ltd. (ASX:LNG), a similar business as Cheniere Energy (LNG). It was increased significantly in October 2014.Keryx Biopharma (KERX): KERX is a medium-sized 4.29% of the US long portfolio position established in Q1 2014 at prices between $12.16 and $17.04. In Q2 2014, the position was increased by two-thirds at prices between $12.11 and $17.04 and the following quarter the pattern continued with a ~74% stake increase at prices between $12.71 and $18.19. Last two quarters have also seen a combined ~40% increase at prices between $9.32 and $14.68. The stock currently trades well below the low-end of those ranges at $6.08. Klarman controls over 24% of the business. His cost-basis is at around $12.PBF Energy (PBF): PBF is a 5.22% of the US long portfolio position first purchased in Q3 2013 at prices between $21 and $26. It was more than doubled in Q4 2013 at prices between $21.44 and $31.46 and was increased by over 175% in Q1 2014 at prices between $23.79 and $31.46. In Q3 2014, the position saw another 28% increase at prices between $23.89 and $28.41 and that was followed with a 21% increase the following quarter at prices between $22.12 and $29.80. This quarter saw a further ~27% increase at prices between $26 and $34. The stock currently trades at $35.24. Klarman’s ownership interest in PBF is at ~12%. The significant stake build-up spanning several quarters indicates a bullish bias.Pioneer Natural Resources (PXD): PXD is a large (top-three) 9.40% of the US long portfolio stake established last quarter at prices between $135 and $167 and increased by ~28% this quarter at prices between $148 and $180. The stock currently trades below that range at $127. For investors attempting to follow Baupost, PXD is a good option to consider for further research.Novacopper (NCQ): This is a minute stake at 0.07% of the US long portfolio. This quarter saw a ~76% increase at prices between $0.50 and $0.66 and the stock is now at $0.40. Although the relative sizing is small, Klarman’s ownership stake is at ~10% of the business.American International Group (AIG) WTS: The AIG Warrants (Strike 45, Expiry 1/19/2021, Yahoo Ticket AIG-WT) were marginally increased this quarter. The stake had seen a ~40% increase last quarter but is still very small at 0.58% of the US long portfolio. They currently trade at $28.20.Atara Biotherapeutics (ATRA): ATRA was a very small 1.16% of the US long portfolio stake established in Q4 2014 at around $19 per share. Last quarter, the stake was increased by ~90% at prices between $18 and $42.90. The stock currently trades at $47.80 and the stake is now at 4.23% of the US long portfolio. This quarter saw a marginal increase. Klarman controls ~17% of the business.Sunedison Semiconductor (SEMI): SEMI is a 2.39% of the US long portfolio position established in Q2 2014 at prices between $14.37 and $17.76 and increased by ~90% last quarter at prices between $15.19 and $27.14. This quarter also saw a ~5% increase. The stock currently trades below his purchase price ranges at $12.89. SEMI was spun-off from Sunedison Inc. (SUNE) on May 22, 2014. Klarman’s ownership interest in the business is at ~20%.Theravance Biopharma (TBPH): TBPH is a 1.39% of the US long portfolio position established in Q2 2014 as a result of the spinoff of TBPH from THRX. The spinoff terms called for THRX shareholders to receive 1 share of TBPH for every 3.5 shares of THRX held. The original stake was increased by ~5% last quarter at prices between $14.70 and $21.73. This quarter also saw a marginal increase. The stock currently trades at $11.96. TBPH has dropped ~48% since the May 2014 spinoff. Klarman controls ~19% of the business.Veritiv Corporation (VRTV): VRTV is a 1.51% of the US long portfolio position established in Q3 2014 at prices between $32.50 and $50.22 and the stock currently trades at $35.25. Last two quarters saw marginal reductions while this quarter saw a ~9% increase at prices between $35.50 and $45.16. Klarman’s ownership interest in VRTV is at ~16%.Stake Decreases:Antero Resources Corporation (AR): AR is a 4.59% of the US long portfolio position established in Q3 2014 at prices between $54.50 and $65.71. The stake was increased by ~185% the following quarter at prices between $38.60 and $55.51. Last quarter saw a further ~19% increase at prices between $34.02 and $42.35. This quarter, the pattern reversed: ~14% reduction at prices between $34 and $46. The stock currently trades at $26.69. Klarman controls ~2.9% of the business.Alon USA Partners LP (ALDW): ALDW is a minutely small 0.22% of the portfolio stake. The stake was reduced by around one-third this quarter at prices between $17.86 and $22 and the stock is now at $26.Kosmos Energy (KOS): The small ~1 % KOS position was purchased in Q2 2014 at prices between $10.05 and $11.23. Q4 2014 saw a ~52% increase at prices between $7.09 and $10.25. This quarter there was an about-turn as ~17% of the stake was sold at prices between $7.91 and $9.78. It currently trades at $7.24.Paratek Pharmaceuticals (PRTK): PRTK is a small 0.66% of the US long portfolio stake established as a result of a cash-infusion prior to the reverse-stock-split, merger, and name-change transaction of Paratek (privately held at the time) with Transcept Pharma (Nasdaq listed at the time) in November 2014. This quarter saw a ~11% reduction at prices between $24.33 and $32.49. The stock currently trades at $24.27. Baupost Group controls ~8.8% of the business.Citigroup WTS (C.WS.A): The warrants have a strike price of $106.10 and expire on 01/04/2019. They currently trade at $6.80 (for ten warrants which can be converted to one Citigroup common stock, Yahoo Ticker C-WTA). The position was increased by ~18% in Q2 2014. Q4 2014 saw an about-turn as ~16% of the position was disposed of at prices between $8.60 and $10. The bulk of the 1.26% position was established at prices between $4.50 and $5.80. This quarter saw a marginal decrease. It is a leveraged bullish bet on Citigroup that would pay off handsomely, if Citigroup common stock trades well above the strike price before expiry.Ocwen Financial (OCN): OCN is a 1.30% of the US long portfolio stake established in Q3 2014 at prices between $25 and $37. In Q4 2014, the position was reduced by ~15% at prices between $14.32 and $26.26. Last quarter saw an about turn as the stake was increased by ~30% at prices between $5.77 and $15.10. The stock currently trades at $7.47. This quarter saw a minor decrease. Baupost’s ownership of the business is at ~6%.Kept Steady:Bellatrix Exploration (BXE): BXE is a very small 0.85% of the US long portfolio stake. It was established in Q4 2014 at prices between $2.99 and $6.15 and increased by ~21% last quarter at around $2.50. The stock currently trades at $1.74. Klarman controls ~11% of the business.ChipMOS Technologies (IMOS): IMOS is a small 1.20% of the US long portfolio position established in Q2 2013 at prices between $12.30 and $20. The original stake was increased by ~19% in Q3 2013 at prices between $15 and $21. The stock currently trades at $15.62. Although the relative sizing of the position is small, it is significant that Klarman owns ~10% of the shares outstanding.eBay Inc. (EBAY): EBAY is a large (top-five) 9.35% of the US long portfolio stake established in Q2 2014 at prices between $18.95 and $21.95. It was increased by ~37% in Q3 2014 at prices between $19.64 and $22.24. Q4 2014 saw another ~53% increase at prices between $18.80 and $22.59. The stock currently trades at $28.Note: EBAY attracted a lot of super-investor interest (Carl Icahn, Wallace Weitz, Mark Hillman, and Leon Cooperman) and activist pressure forced the company to spin-off its PayPal (PYPL) subsidiary. The prices quoted above are adjusted for that spin-off.Forward Pharma (FWP): FWP is a small 2.55% of the US long portfolio stake established last quarter at around $22. The stock currently trades at $27.60. Klarman controls ~12% of the business.Kindred Biosciences (KIN): KIN is a very small 0.34% of the US long portfolio position. The stake as a percentage of the business is very significant at over 15%. It was established in Q4 2013 at a cost-basis of around $11. Q3 2014 saw a ~9% stake increase at prices between $9.25 and $19.38 and the stock currently trades well below those ranges at $6.07. KIN share-price dropped around one-third in August 2014 when the company announced the failure of their canine arthritis drug in a clinical trial. Another 30% drop ensued in December 2014 after it terminated its atopic dermatitis program.KLX Inc. (KLXI): KLXI is a small ~1.10% of the US long portfolio position established last quarter at prices between $37.34 and $41.65. The stock currently trades at $38.86. KLXI is a spinoff from B/E Aerospace (BEAV) and it started trading in December 2014.Micron Technology (MU): As of Q3 2014, MU was Klarman’s largest position at 30.82% of the US long portfolio. The stake was first established in Q2 2013 at prices between $9.10 and $14 and increased by just over 50% in Q3 2013 at prices between $12.55 and $17.60. Q4 2014 saw an about-turn as ~62% of the position was sold at prices between $27.03 and $36.49. The stock currently trades at $17.70. Klarman is opportunistically harvesting huge long-term gains from this position.NovaGold Resources Inc. (NG): NG is a 1.24% stake built up over several quarters in 2012 at prices between $3.5 and $12. The most recent purchases happened in Q3 2012 and Q4 2012 when the stake was increased by roughly one-third at prices between $3.68 and $6.19. The stock currently trades near the low-end of those ranges at $3.49.Theravance Inc (THRX): THRX is a 5.97% of the US long portfolio stake. It is a very long-term position that has been in the portfolio since 2008. Baupost controls around 17% of the business. The stock currently trades at $13.84.ViaSat (VSAT): VSAT is Klarman’s second-largest US long position at 11.59% of the portfolio. Since Q3 2012, the stake has seen only minor increases. Klarman first purchased VSAT in 2008 at much lower prices and his overall cost-basis is in the high-teens. The stock currently trades at $59.47. He is sitting on huge gains on the position. The stock returned ~60% in 2013 but has since remained flat.Alliance One International (AOI): AOI is a minute 0.25% of the portfolio stake kept steady this quarter. Although the relative sizing is small, Klarman’s ownership stake in AOI is very significant at 7.20% of the business.Note: The 13F also lists a very small position in Theravance Notes. It was increased by ~20% last quarter and the stake is currently at 0.76% of the 13F portfolio.The spreadsheet below highlights changes to Klarman's US stock holdings in Q2 2015:Note: July 9, 2015, 13G Filing - BITI - 130.68M shares - 12.92% of business.Note: April 9, 2015,  - ATRA - 4.76M shares - 19.55% of business.Note 1: On February 13, 2015, a  showed Klarman owning 21.75M shares (18.54% of business) of THRX. The report looks inconsistent with what is in the latest 13F.Note 2: On February 13, 2015, a  showed Klarman owning 23.71M shares (2.19% of the business) of MU. That report looks inconsistent with what is in the latest 13F.Note 3: On January 9, 2015, a  showed Klarman owning 24.8M shares (~10% of the business) of LNG. That report looks inconsistent with what is in the latest 13F."