"Tracking Seth Klarman’s Baupost Group Holdings – Q1 2015 Update"
"Seth Klarman’s US long portfolio increased from $5.09B to $5.95B this quarter.Baupost Group added Pioneer Natural Resources and significantly increased Atara Biotherapeutics and Sunedison Semiconductor.The portfolio continues to be heavily concentrated with the top-three positions accounting for around 40% 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 05/15/2015. Please visit our  article for an idea on how his holdings have progressed over the years and our  highlighting the fund's moves during Q4 2014.Klarman’s US long portfolio increased ~17% from $5.09B to $5.95B this quarter. The increase was primarily due to a large 8.70% position in Pioneer Natural Resources established in the quarter. The total number of 13F securities held is at 28. The stakes are heavily concentrated with Cheniere Energy, ViaSat Inc., eBay Inc., Micron Technology, and Pioneer Natural Resources together accounting for around 56% of the entire US long portfolio.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:Pioneer Natural Resources (PXD): PXD is a fairly large (top-five) 8.70% of the US long portfolio stake established this quarter at prices between $135 and $167. The stock currently trades well within that range at $155. For investors attempting to follow Baupost, PXD is a good option to consider for further research.KLX Inc. (KLXI): KLXI is a small ~1% of the US long portfolio position established this quarter at prices between $37.34 and $41.65. The stock currently trades at $44.50. KLXI is a spinoff from B/E Aerospace (BEAV) and it started trading in December 2014.Stake Disposals:Syneron Medical Ltd. (ELOS): ELOS was a 0.44% of the US long portfolio position.  It had been in the portfolio since Q2 2006. Q3 2014 saw a ~25% stake reduction at prices between $9.74 and $11.03 and last quarter saw a further ~20% reduction at prices between $8.44 and $10.57. This quarter, the remaining position was disposed of at prices between $9.06 and $12.38. The stock currently trades at $11.76.Stake Increases:Antero Resources Corporation (AR): AR is a 5.55% of the US long portfolio position established in Q3 2014 at prices between $54.50 and $65.71. The stake was increased by ~185% last quarter at prices between $38.60 and $55.51. This quarter saw a further ~19% increase at prices between $34.02 and $42.35. The stock currently trades at $42.75.Atara Biotherapeutics (ATRA): ATRA was a very small 1.16% of the US long portfolio stake established last quarter at around $19 per share. This quarter, the stake was increased by ~90% at prices between $18 and $42.90. The stock currently trades at $37.30 and the stake is now at 3.24% of the US long portfolio. Klarman controls 19.54% of the business.Bellatrix Exploration (BXE): BXE is a very small 0.89% of the US long portfolio stake. It was established last quarter at prices between $2.99 and $6.15 and increased by ~21% this quarter at around $2.50. The stock currently trades at $3.64. Klarman controls ~11% of the business.Keryx Biopharma (KERX): KERX is a medium-sized 4.79% 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. This quarter also saw a ~22% increase at prices between $10.87 and $14.68. The stock currently trades below the low-end of those ranges at $10.33. Klarman controls over 20% of the business. His cost-basis is at around $14.Ocwen Financial (OCN): OCN is a 1.09% of the US long portfolio stake established in Q3 2014 at prices between $25 and $37. Last quarter, the position was reduced by ~15% at prices between $14.32 and $26.26. This 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 $10.03. Baupost’s ownership of the business is at around 6.25%.Sunedison Semiconductor (SEMI): SEMI is a 3.43% of the US long portfolio position established in Q2 2014 at prices between $14.37 and $17.76 and increased by ~90% this quarter at prices between $15.19 and $27.14. The stock currently trades at $22.14. SEMI was spun-off from Sunedison Inc. (SUNE) on May 22, 2014. Klarman’s ownership interest in the business is at ~19%.Theravance Biopharma (TBPH): TBPH is a 1.86% 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% this quarter at prices between $14.70 and $21.73. The stock currently trades at $14.69. TBPH has dropped ~36% since the May 2014 spinoff. Klarman controls ~19% of the business.American International Group (AIG) WTS: The AIG Warrants (Strike 45, Expiry 1/19/2021, Yahoo Ticket AIG-WT) were increased by ~40% during the quarter. The stake is still very small at 0.46% of the US long portfolio. The warrants currently trade at $24.30.Note: The 13F also lists a very small position in Theravance Notes. It was increased by ~20% during the quarter and the stake is currently at 0.69% of the 13F portfolio.Stake Decreases:Veritiv Corporation (VRTV): VRTV is a 1.69% of the US long portfolio position established in Q3 2014 at prices between $32.50 and $50.22 and the stock currently trades at $41.12. Last two quarters have seen marginal reductions. Klarman’s ownership interest in VRTV is at ~14%.Kept Steady:Cheniere Energy (LNG): LNG is Klarman’s largest 13F position at 17.96% of the US long portfolio. The original stake was established in Q1 2014 at prices between $41 and $55. In Q3 2014, the original stake was increased by ~87% at prices between $70 and $84.29 and that was followed by another 23% increase last quarter at prices between $61.90 and $80.03. The stock currently trades at $75.86. 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.ChipMOS Technologies (IMOS): IMOS is a small 1.36% 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 $23.48. Although the relative sizing of the position is small, it is significant that Klarman owns 9.84% of the shares outstanding.Citigroup WTS (C.WS.A): The warrants have a strike price of $106.10 and expire on 01/04/2019. They currently trade at $7 (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. Last quarter 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. 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.eBay Inc. (EBAY): EBAY is a large (top-three) 9.03% of the US long portfolio stake established in Q2 2014 at prices between $48.25 and $55.89. It was increased by ~37% in Q3 2014 at prices between $50 and $56.63. Last quarter saw another ~53% increase at prices between $47.88 and $57.53. The stock currently trades at $59.41. EBAY is attracting a lot of super-investor interest and activist pressure has forced the company to unveil plans to spin-off its PayPal subsidiary. Carl Icahn, Wallace Weitz, Mark Hillman, and Leon Cooperman have all made significant purchases recently.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 $34.65. Klarman controls ~12% of the business.Kindred Biosciences (KIN): KIN is a very small 0.36% 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 $7.29. 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.Kosmos Energy (KOS): The small ~1 % KOS position was purchased in Q2 2014 at prices between $10.05 and $11.23 and it currently trades at $9.31. Last quarter saw a ~52% increase at prices between $7.09 and $10.25.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. Last quarter saw an about-turn as ~62% of the position was sold at prices between $27.03 and $36.49. The stock currently trades at $26.33. Klarman is opportunistically harvesting huge long-term gains from this position.NovaGold Resources Inc. (NG): NG is a 1.08% 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 $4.18.Paratek Pharmaceuticals (PRTK): PRTK is a small 0.91% 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. The 12.04% ownership stake was disclosed in a 13G filing on December 11, 2014. The stock currently trades at $27.49.PBF Energy (PBF): PBF is a 4.94% 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 last quarter at prices between $22.12 and $29.80. The stock currently trades at $27.75. Klarman’s ownership interest in PBF is at ~10%. The significant stake build-up spanning several quarters indicates a bullish bias.Theravance Inc (THRX): THRX is a 5.23% 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 $16.25.ViaSat (VSAT): VSAT is Klarman’s second-largest US long position at 11.55% 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 $61.71. He is sitting on huge gains on the position. The stock returned ~60% in 2013 but has since remained flat.Alliance One International (AOI), Alon USA Partners LP (ALDW), & Novacopper (NCQ): These are minute stakes (less than 0.5% of the portfolio each) that were kept steady this quarter. Although the relative sizing is small, Klarman’s ownership stake in AOI and NCQ are very significant at 7.20% and 9.90% respectively.The spreadsheet below highlights changes to Klarman's US stock holdings in Q1 2015:Note 1: 12/11/2014 13G filing disclosed 12% ownership in Paratek Pharma. The stake was established as a result of a cash-infusion prior to the reverse-stock-split, merger, and name-change transaction with Transcept Pharma. See  &  (the doc says not for distribution in USA and some other countries for some reason) for details.Note 2: 1/12/2015 13G shows LNG stake increase to 24.8M shares (~120% increase). Also, there is a filing that shows disposal of AVEO.Note 3:2/10/2015- three 13G filings/amendments - show big stake in (11.38% - 21.84M shares) in Bellatrix Exploration, Stake increase in SEMI (19.03% - 7.90M shares), and reduction in Syneron (ELOS - 3.07% - 1.13M shares).Note 4: 2/13/2015 - summary of 7 13G filings/amendments - TBPH (18.81% - 6.06M shares), KIN (15.28% - 3.01M shares), MU (2.19% - 23.71M shares), THRX (18.54% - 21.75M shares), NCU (9.9% - 6M shares), VSAT (24.58% - 11.53M shares), VRTV (14.46% - 2.31M shares). All except MU & THRX are consistent with 13F - looks like they increased the positions - MU (19.7M in 13F vs. 23.71M in 13G) & THRX (19.82M in 13F vs 21.75M in 13G).Note 5: Matthew Finston (SA) had an article that listed Klarman’s foreign securities. I asked him where he got it from and he said Bloomberg Professional. I could probably take the prominent ones from that list for my next article."