"Tracking Seth Klarman’s Baupost Group Holdings – Q2 2021 Update"
"Seth Klarman’s 13F portfolio value decreased from $12.56B to $12.33B this quarter.Baupost Group increased Micron Technology and Facebook while dropping Fox Corp.The portfolio continues to be heavily concentrated with the top three positions accounting for ~32% of the 13F portfolio.This article is part of a series that provide an ongoing analysis of the changes made to Baupost Group's 13F stock portfolio on a quarterly basis. It is based on Klarman’s regulatory  filed on 08/13/2021. Please visit our  article for an idea on how his holdings have progressed over the years and our  for the fund's moves during Q1 2021.Baupost Group’s 13F portfolio value decreased ~2% from $12.56B to $12.33B this quarter. The total number of 13F securities remained steady at 59. The portfolio is heavily concentrated with Liberty Global, Intel, eBay Inc., Qorvo, and ViaSat together accounting for ~47% of the 13F holdings.Since inception (1982), Baupost Group’s 13F 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. On average, the fund has held ~25% cash over the last decade. 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.Note 1: Baupost has several very small (less than 0.5% of the portfolio each) stakes, most of which are SPAC common shares and/or warrants. Those positions are Ajax I (AJAX) & wts, Altimeter Growth Corp II (AGCB), Avanti Acquisition (AVAN) & wts, Broadstone Acquisition (BSN) & wts, Dragoneer Growth Opportunities II (DGNS), Dragoneer Growth Opportunities III (DGNU), Finch Therapeutics Group (FNCH), Garrett Motion (GTX), Horizon Acquisition II (HZON) & wts, InvestIndustrial Acquisition (IIAC) & wts, Liberty Media Acquisition Corp (LMACA) & wts, Noble Corp (NE), Pershing Square Tontine (PSTH) wts, Redball Acquisition Corp (RBAC) wts, Hippo Insurance (HIPO) & wts previously Reinvent Technology Partners Z, Reinvent Technology Partners Y (RTPYU), Joby Aviation (JOBY) & wts previously Reinvent Technology Partners, SVF Investment Corp (SVFA) & wts, Trilogy Metals (TMQ), and The Beauty Health Company (SKIN) wts previously Vesper Healthcare Acquisition. Although the SPAC stakes as a percentage of the portfolio are very small, it is significant that they hold mid-to-high-single-digit percentage of the trust-values in most of them.Note 2: Recent regulatory filings show them owning ~20% of Garrett Motion (GTX) and ~16% of Outbrain Inc. (OB). GTX emerged from Chapter 11 bankruptcy in May. Baupost started buying shares last November when it was trading below $3. The bulk of the ownership is through a series A preferred share offering.New Stakes:None.Stake Disposals:Fox Corp (FOX) (FOXA): The position came about as a result of the merger transaction between Walt Disney and Twenty First Century Fox. Klarman had a huge position in Twenty First Century Fox. The deal closed in March 2019 and the terms were ~$38 per share in cash or Disney stock subject to collar and one-third of one-share of new Fox for each share of Twenty First Century Fox. Q4 2020 saw a ~15% trimming. That was followed with a ~50% selling last quarter at prices between ~$28.50 and ~$41.50. The disposal this quarter was at prices between ~$35 and ~$37.50. The stock currently trades at ~$34.Fidelity National Financial (FNF): The ~1% FNF position was purchased in Q4 2020 at prices between ~$30 and ~$39.50. Last quarter saw a ~20% selling at prices between ~$36.30 and ~$42.30. The elimination this quarter was at prices between ~$41 and ~$48. The stock is now at ~$49.Healthpeak Properties (PEAK): The 1.26% PEAK position was purchased in Q3 2020 at prices between $25.50 and $29 and it now goes for $35.83. Last quarter saw a ~25% stake increase at prices between ~$28.50 and ~$32.50. The position was disposed this quarter at prices between ~$32 and ~$35.Stake Increases:Qorvo Inc. (QRVO): QRVO is a large (top five) 8.47% portfolio stake established in Q1 2017 at prices between $53 and $69 and increased by ~25% the following quarter at prices between $63 and $79. There was another ~22% stake increase in Q4 2017 at prices between $65 and $81. 2019 had seen a ~75% selling at prices between $60 and $118. Q4 2020 saw an about turn: ~50% stake increase at prices between ~$125 and ~$170. That was followed with a ~18% further increase last quarter. This quarter also saw a marginal increase. The stock is now at ~$188.Micron Technology (MU): MU is a 4.94% of the portfolio position purchased in Q3 2020 at prices between $42.50 and $52.65 and the stock currently trades at $70.92. This quarter saw a one-third increase at prices between ~$77 and ~$96.Facebook Inc. (FB): FB is a 4.36% of the portfolio position established in Q1 2020 at prices between $146 and $223. The next two quarters had seen a ~70% selling at prices between ~$154 and ~$304. There was a ~175% stake increase over the last three quarters at prices between ~$245 and ~$355. The stock is now at ~$363.Theravance Biopharma (TBPH): TBPH is a 1.17% of the portfolio position established in Q2 2014 as a result of the spinoff of TBPH from Theravance (now Innoviva). The spinoff terms called for Theravance shareholders to receive 1 share of TBPH for every 3.5 shares of Theravance held. The last major activity was a ~25% increase in Q4 2016 at prices between $24.50 and $38.50. This quarter also saw a ~14% stake increase at prices between ~$14.50 and ~$22.50. The stock is now at $13.52.Note: Klarman controls ~20% of the business. The 13F also lists a small position in Theravance Biopharma Notes.IronSource Ltd. (IS) previously Thoma Bravo Advantage: Thoma Bravo Advantage was a SPAC that had a ~$1B IPO in January. In March, they announced the merger with IronSource. The transaction closed in June. Baupost established the original stake last quarter. The position was doubled this quarter at prices between ~$10 and ~$11. The stock currently trades below that range at $9.68.Stake Decreases:Liberty Global (LBTYK) (TBTYA): LBTYK is currently the largest position at 13.53% of the portfolio. It was established in Q3 2018 at prices between $25 and $28.50 and increased by ~120% next quarter at prices between $19.50 and $27.50. There was another ~27% stake increase in Q1 2019 at prices between $19.80 and $25.80. Since then the activity has been minor. The stock currently trades at $29.32.Intel Corp (INTC): INTC is a large (top three) ~10% of the portfolio stake established in Q4 2020 at prices between ~$44 and ~$55. Last quarter saw a ~28% stake increase at prices between ~$50 and ~$66. The stock currently trades at $53.49. This quarter saw a ~7% trimming.eBay Inc. (EBAY): EBAY is currently the third-largest 13F position at 8.48% of the portfolio. It was established in Q4 2018 at prices between $26 and $33 and increased by ~40% in Q1 2019 at prices between $28 and $38. There was a ~18% selling next quarter at prices between $35.50 and $40. That was followed with a ~30% selling in Q3 2019 at prices between $38 and $42. Q4 2019 saw a ~20% stake increase at prices between $34.50 and $39.25. That was followed with a ~60% increase in Q1 2020 at prices between $26.34 and $38.50. Last two quarters have seen a ~50% reduction at prices between ~$50.50 and ~$70.50. The stock currently trades at ~$74.Willis Towers Watson (WLTW): WLTW is a 3.53% of the portfolio stake established last quarter at prices between ~$200 and ~$235 and the stock currently trades at ~$219. This quarter saw a ~25% selling at prices between ~$225 and ~$270.Note: Aon plc (AON) was to merge with Willis Towers Watson in an all-stock deal (1.08 shares of AON for each WLTW held) announced last March. The transaction fell through last month following monopoly concerns raised by regulators.Nexstar Media Group (NXST): The 2.45% NXST position was established in Q4 2018 at prices between $71 and $88. Q2 & Q3 2019 saw a ~80% stake increase at prices between $90 and $120. The stock is now at ~$146. There was a minor ~2% trimming this quarter.SS&C Technologies (SSNC): SSNC is a 1.94% position built in Q3 2020 at prices between ~$56 and ~$65 and it is now at ~$77. Last two quarters had seen a ~25% stake increase at prices between ~$63 and ~$71. This quarter saw a ~13% trimming.Pershing Square Tontine (PSTH) and warrants (PSTHWS): PSTH is a 2.43% of the 13F portfolio stake established in Q3 2020. Pershing Square Tontine is a ~$4B SPAC that had an IPO last July. The units started trading at ~$21.50. Separate trading of the stock and warrants started around mid-September. They currently trade at $20.30 and $3.45 respectively. The common stake was reduced by ~27% in Q4 2020 at prices between ~$22.25 and ~$27.75. That was followed with a ~20% selling this quarter at prices between ~$22 and ~$25.50.DigitalBridge (DBRG) previously Colony Capital: The 1.47% stake in DigitalBridge came about as a result of the three-way merger of Colony Capital, Northstar Asset Management Group, and Northstar Realty Finance that closed in January 2017. Baupost held stakes in all three of these stocks and those got converted into CLNY shares. Roughly half the position was sold in Q2 2020 at prices between $1.42 and $3.10. Since then, the activity has been minor. Their overall cost-basis is ~$12.50 per share. DBRG currently trades at ~$7. There was a ~5% trimming this quarter.Advantage Solutions (ADV): The ~1% ADV stake established in Q4 2020 saw a ~2% trimming this quarter.Kept Steady:ViaSat (VSAT): VSAT is a large (top five) position at 6.59% of the portfolio. The stake has only seen minor increases since Q3 2012. Klarman first purchased VSAT in 2008 at much lower prices and his overall cost-basis is in the high-teens. Last July, Baupost participated in ViaSat’s 4.47M share private placement by acquiring ~2.56M shares at ~$39 per share. The stock currently trades at $54.83.Note: Baupost controls ~23% of the business.Alphabet Inc. (GOOG) (GOOGL): The 5.92% GOOG stake was purchased in Q1 2020 at prices between $1057 and $1527 and the stock currently trades at ~$2768. Last three quarters of 2020 had seen a ~75% selling at prices between ~$1098 and ~$1830. There was a ~265% stake increase last quarter at prices between ~$1725 and ~$2100.Translate Bio (TBIO): The ~4% TBIO stake saw a ~35% stake increase in Q2 2019 at prices between $8.75 and $13.25 and that was followed with a stake doubling next quarter at prices between $8 and $12. There was a minor ~3% stake increase in Q2 2020 at ~$22 per share. The stock is now at $37.74.Note 1: Sanofi (SNY) is acquiring Translate Bio in a $38 per share all-cash deal announced earlier this month.Note 2: TBIO had an IPO in June 2018. Its main asset is a compound to treat Cystic fibrosis (mRNA therapy) acquired from Shire plc. Klarman controls ~24% of the business.Liberty Media Sirius XM (LSXMK): The 3.76% LSXMK stake was primarily built in Q3 2020 at prices between $32 and $37 and the stock currently trades at $47.70. Q4 2020 saw a ~14% stake increase.International Flavors & Fragrances (IFF): IFF is a 2.33% of the portfolio position established last quarter at prices between ~$105 and ~$141. The stock is now at ~$157.PG&E Corporation (PCG): PCG is a 2.53% stake built during the first three quarters of 2018 at prices between $38 and $47. Q2 2019 saw another 58% stake increase at prices between $6 and $24. The three quarters thru Q2 2020 had seen a ~80% reduction at prices between ~$6.50 and ~$18. Q3 2020 saw the position rebuilt at prices between $8.60 and $10. The stock currently trades at $9.12.Note: It was reported in November 2018 that Baupost had hedged this position by buying $1B worth of certain insurance claims against PG&E connected to the Nov 2017 wildfires for ~35c on the dollar. Baupost collected ~$3B on those payments last August.Veritiv Corporation (VRTV): VRTV is a 1.78% of the 13F portfolio position established in Q3 2014 at prices between $32.50 and $50.50. Q4 2017 saw a ~20% stake increase at prices between $22.50 and $32.50. The stock currently trades at $83.91.Note: Klarman’s ownership interest in VRTV is ~23%.Verint Systems (VRNT): The 1.11% VRNT stake was built in Q3 2020 at prices between ~$42 and ~$51 and the stock currently trades at $42.70.  Last quarter saw a ~20% stake increase at prices between ~$33.50 and ~$52.Atara Biotherapeutics (ATRA): ATRA is a ~1% of the portfolio stake established in Q4 2014 at around $19 per share. The original position was almost doubled next quarter at prices between $18 and $42.90. Recent activity follows: Q3 2019 also saw a ~20% stake increase at prices between $12 and $20. Q2 2020 saw a similar increase at prices between $7.50 and $14.93. The stock currently trades at $12.45. Last two quarters had seen a combined ~15% trimming.Note: Klarman controls ~10% of the business.Nuvation Bio (NUVB) and Cullinan Oncology (CGEM): NUVB is a 0.63% of the portfolio stake established this quarter following their de-SPAC transaction that closed last October. The stock currently trades at $9.13. CGEM is a very small 0.38% of the portfolio position. They had an IPO in January. Shares started trading at ~$35 and currently goes for $27.71. Baupost Group’s stake goes back to funding rounds prior to the IPO.Note: The Nuvation Bio SPAC sponsor was Panacea Acquisition. In 2004, their team did a SPAC transaction for Medivation which turned out to be the best performing biotech SPAC deal ever. Medivation was acquired by Pfizer in 2015: after going revenue-less for almost a decade, Medivation came up with the blockbuster drug XTANDI (late-stage prostate cancer treatment). The Pfizer transaction in 2015 was for ~$14B compared to ~$3M market-cap for the de-SPAC transaction that closed in December 2004.The spreadsheet below highlights changes to Klarman's 13F stock holdings in Q2 2021:Source: John Vincent. Data constructed from Baupost Group’s 13F filings for Q1 2021 and Q2 2021.Regulatory filings from 2/16/2021 thru 5/19/2021: Form 4 – 5/13 – GTX – 3.575M common, disposed ~762K series A preferred, still has 17.31M series A preferred (no expiration, initially convertible 1:1), Form 4 – 5/11 – 381K series A preferred disposed, 13D, Form 3 – 5/7 – 32M shares – 34.26% of business – 28.45M Series A Preferred acquired at an outlay of $149.37M, rest is common acquired previously at around $2.90 per share, Form 4 – 5/4 – pre-bankruptcy share disposal (exchange), 13D/A – 5/4 – 0, 13D/A – 3/10 – 3.575M shares – 4.72% of business, 13D/A – 2/17 - same. 13D/A – 5/5 – VSAT – 16.29M shares – 22.5% of business."