"Tracking Seth Klarman’s Baupost Group Holdings – Q3 2013 Update"
"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 11/13/2013. Please visit our  article for an idea on how his holdings have progressed over the years and our  highlighting the fund's moves during Q2 2013.Klarman’s US long portfolio decreased from ~$4B to ~$3.5B this quarter. The very large position in Micron Technology established last quarter was increased by another 50% to a whopping 27.80% US long portfolio allocation as of this quarter. The number of holdings in the US long portfolio reduced from 21 to 19 this quarter: minute positions in Kinross Gold, Pretium Resources, and Yamana Gold were eliminated and a very small position in PBF Energy was established this quarter.Since inception (1982), Baupost Group’s US long portfolio has accounted for between 2.4% to 15% of the Assets Under Management (AUM). Despite reducing the allocation by ~15% this quarter, 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.New Stakes:PBF Energy (PBF): PBF is a very small 0.53% of the US long portfolio position established this quarter at prices between $21 and $26. The stock currently trades outside that range at $27.75. The position size is too small to indicate a clear bias.Stake Disposals:Yamana Gold (AUY), Kinross Gold (KGC), & Pretium Resources (PVG): These are very small positions in the gold-mining sector established last quarter and disposed of this quarter. Combined, they accounted for only about 1% of the US long portfolio. The quick about-turn indicates a mild bearish bias.Stake Increases:Micron Technology (MU): MU is a huge 27.80% of the US long portfolio position established last quarter at prices between $9.10 and $14 and increased by just over 50% this quarter at prices between $12.55 and $17.60. The stock currently trades outside those ranges at around $19. The aggressive stake build-up indicates a clear bullish bias. He is sitting on large short-term gains on the position as the stock vaulted close to 80% in the last six months. Klarman owns just over 6% of the shares outstanding.Theravance Inc (THRX): THRX is a large 18.81% of the US long portfolio position that was increased by 12% this quarter at prices between $35.80 and $42.64. The stake was increased by over 20% last quarter as well at prices between $22.50 and $42. It currently trades at around $35. THRX is a very long-term position that has been in the portfolio since 2008. The stock is up around 60% YTD - the price spiked in May following a $1B royalty deal with Elan PLC. Baupost controls around 19% of the businessIdenix Pharmaceuticals (IDIX): IDIX is a 3.83% of the US long portfolio stake that was built-up over several quarters starting in Q2 2011. It is a very volatile stock and the price fluctuated between $3.5 and $15 during the period of the stake acquisition. The last four quarters saw the position increased by ~150% at prices between $2.93 and $5.93. This quarter, the position was increased by 11%. The stock currently trades at $4.62. On 11/1/2013, Klarman disclosed in a regulatory 13D filing that his stake was increased to 36.91M shares - 27.55% of the shares outstanding - the most recent purchases happened at prices between $3.56 and $4.85. The significant stake increase over several quarters indicates a clear bullish bias. For investors attempting to follow Klarman, IDIX is a good option to consider.ChipMOS Technologies (IMOS): IMOS is a small 1.47% of the US long portfolio position established last quarter at prices between $12.30 and $20 and increased by ~19% this quarter at prices between $15 and $21. The stock currently trades at around $16.91. The activity indicates a mild bullish bias - although the relative sizing of the position is small, it is significant that Klarman owns ~14% of the shares outstanding.Stake Decreases:BP PLC (BP): BP was Klarman’s second largest 13F position and represented 19.30% of the US long portfolio as of last quarter: the huge stake build-up over the last year happened at prices between $36 and $49. This quarter saw an about-turn as Klarman reduced the position drastically to a 5.85% allocation at prices between $40.50 and $43.50. The stock currently trades outside that range at $46.45. The large stake disposal indicates a bearish bias.Oracle Corporation (ORCL): ORCL is a 1.97% of the US long portfolio stake established in Q2 2012 when the price-per-share varied between $25.61 and $29.70. It was trimmed by around 15% in Q3 2012 at prices between $28.82 and $33.10 and by just over 22% in Q4 2012 at prices between $29.58 and $34. The position was reduced by another two-thirds in Q1 2013 at prices between $31.25 and $36.34 and kept steady last quarter. The pattern continued this quarter with a stake reduction of another 30% at prices between $30 and $34. The stock currently trades at around $35. The activity signifies a clear bearish bias.Alliance One International (AOI): AOI is a very small position (0.46% of the US long portfolio) that was reduced by ~17% this quarter. As the position size is very small and the stake reduction was minor, the activity does not indicate a clear bias.Central Pac Financial Corp. (CPF): CPF is a very small 0.34% of the US long portfolio position that was reduced by ~50% this quarter. The stake reduction indicates a mild bearish bias.American International Group (AIG) & WTS: AIG was a large 11.55% position build-up from Q4 2012 at prices between $30.68 and $40. Last quarter saw a turnaround, as the position was trimmed by 15% at prices between $37.50 and $46. This quarter, the position was almost eliminated at prices between $44 and $51. The stock currently trades at around $48.58. The large stake reduction indicates a clear bearish bias.Ituran Location and Control (ITRN): ITRN is a minute 0.22% of the US long portfolio position that was reduced by ~54% this quarter. As the position size is very small, the activity does not represent a clear bias.The rest of the portfolio remained steady during the quarter:Viasat (VSAT): VSAT is currently Klarman’s third-largest US long position accounting for 17.41% of the portfolio. His most recent purchases were minor stake increases that happened in Q3 2012 and Q4 2012 at prices between $34 and $41. Klarman first purchased VSAT in 2008 at much lower prices and so his overall cost-basis is in the high-teens. The stock currently trades well above those ranges at around $62. He is sitting on huge gains on the position. The stock has returned ~60% this year, but Klarman is continuing to hold on.Rovi Corporation (ROVI): ROVI is a 2.94% of the US long portfolio stake established in Q3 2012 at prices between $10.01 and $19.14. The position was almost doubled in Q1 2013 at prices between $15.43 and $21.43. Last quarter, the position was reduced by ~25% at prices between $20 and $26.50 but was kept steady this quarter. The stock currently trades at around $16.93.Citigroup WTS (C.WS.A): The warrants have a strike price of $106.10 and expire on 01/04/2019. They currently trade at $6.20 (for ten warrants which can be converted to one Citigroup common stock). The bulk of the 1.75% 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.Novagold Resources Inc (NG): NG is a 1.25% stake built up over several quarters last year 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 well below that range at around $2.30. Klarman is sitting tight in the face of a large price-drop on this position.Enzon Pharmaceuticals Inc. (ENZN), Aveo Pharmaceuticals Inc. (AVEO), Novacopper Inc. (NCQ), and Syneron Medical Ltd. (ELOS): These are small positions, each accounting for less than 1% of the US long portfolio. They were kept steady this quarter and so do not indicate a clear bias.The spreadsheet below highlights changes to Klarman's US stock holdings in Q3 2013:"