"Tracking Seth Klarman’s Baupost Group Holdings – Q4 2019 Update"
"Seth Klarman’s 13F portfolio value increased from $8.83B to $9.06B this quarter.Baupost Group increased Liberty Global, eBay, and McKesson while dropping Antero Resources and Paratek Pharmaceuticals.The portfolio continues to be heavily concentrated with the top three positions accounting for ~39% 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 02/13/2020. Please visit our  article for an idea on how his holdings have progressed over the years and our  for the fund's moves during Q3 2019.Baupost Group’s 13F portfolio value increased ~3% from $8.83B to $9.06B this quarter. The total number of 13F securities decreased from 30 to 29. The portfolio is heavily concentrated with Liberty Global, Fox Corp, ViaSat, eBay Inc., and ViacomCBS together accounting for ~55% 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 the average, the fund held ~25% cash over the last decade but that allocation has gone up to ~31% as of EOY 2019. Overall, Baupost has underperformed equity indexes in recent years and returned in the high-single-digits for 2019. 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:HP Inc. (HP): HP is a 2.27% of the portfolio stake established this quarter at prices between $16 and $20.75 and the stock currently trades above that range at $22.37.Note: In November, Xerox (XRX) made a $22 cash-and-stock offer for HP. That offer was raised to $24 per share ($18.40 cash and 0.149 shares of XRX for each HP held) last week.Eldorado Resorts (ERI) and McDermott International (MDRIQ): These are minutely small new positions established this quarter.Note: Eldorado Resorts is acquiring Caesars Entertainment (CZR) in a deal announced in June 2019. It is expected to close in H1 2020. MDRIQ filed for Chapter 11 bankruptcy last month. Baupost also has a position in McDermott debt.Stake Disposals:Takeda Pharma (TAK): TAK was a 1.84% of the portfolio stake established in Q1 2019 at prices between $16.70 and $21.50. The position was eliminated this quarter at prices between $16.75 and $21. The stock currently trades at $19.44.Antero Resources Corporation (AR): AR was a small 0.72% of the portfolio position as of last quarter. It was established in Q3 2014 at prices between $54.50 and $66. The stake was increased by ~185% the following quarter at prices between $38.50 and $55.50. 2015 & 2017 also saw significant buying at prices above $20 per share. The position size peaked at over 28M shares in 2018. Last quarter saw an about turn: stake reduced by ~25% at prices between $3.12 and $5.55. That was followed with the disposal this quarter at prices between $1.95 and $3. The stock is now at $1.65. Baupost realized long-term losses.Gossamer Bio (GOSS) and Paratek Pharmaceuticals (PRTK): These two minutely small stakes were disposed during the quarter.Stake Increases:Liberty Global (LBTYK) (TBTYA): LBTYK is currently the largest position at ~15% 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 and that was followed with a ~12% stake increase next quarter. The stock currently trades just below the low end of those ranges at $19.45. This quarter also saw a ~16% stake increase. For investors attempting to follow, LBTYK is a good option to consider for further research.eBay Inc. (EBAY): EBAY is a large (top five) ~8% of the portfolio stake 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 last quarter at prices between $38 and $42. This quarter saw a ~20% stake increase at prices between $34.50 and $39.25. The stock currently trades at $38.14.Note 1: eBay stock spiked earlier this month following acquisition interest from Intercontinental Exchange (ICE).Note 2: Starboard Value has an activist position in eBay and is pushing management to commit to a separation of eBay Classifieds Group.ViacomCBS (VIAC) previously CBS Corporation: VIAC is a large (top five) ~8% position purchased in Q4 2018 at prices between $42 and $58.50 and increased by 235% next quarter at prices between $43.50 and $52. Last three quarters have also seen a stake doubling at prices between $35.50 and $53.50. The stock currently trades just below the low end of those ranges at ~$35. For investors attempting to follow, VIAC is a good option to consider for further research.Note: The reunification of CBS and Viacom (VIAB) announced in August closed in December.McKesson Corp. (MCK): MCK is a 2.44% portfolio stake established in Q3 2017 at prices between $146 and $168 and increased by ~170% in the following quarter at prices between $135 and $163. The stock currently trades at ~$168. The first three quarters of 2018 saw a ~60% stake increase at prices between $123 and $177. Q4 2018 saw a ~20% selling at prices between $108 and $137 while next quarter saw a two-thirds increase at prices between $110 and $136. The pattern reversed again last quarter: ~50% reduction at prices between $134 and $149. That was followed with a ~20% stake increase this quarter at prices between $130 and $153.Note: MCK had a previous round-trip. It was a 1.75% portfolio stake established in Q4 2016 at prices between $124 and $167 and sold out in Q2 2017 at prices between $135 and $168.Stake Decreases:Qorvo Inc. (QRVO): QRVO is a fairly large 3.53% 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. The stock is now at $106. Last three quarters saw a ~75% selling at prices between $60 and $118.Bristol Myers Squibb (BMY): The ~3% BMY stake saw a 225% stake increase in Q2 2019 at prices between $44.50 and $49.50. The position was established in Q1 2019 at prices between $45 and $54 and the stock is now at $66.38. There was a ~23% selling last quarter at prices between $42.50 and $51. That was followed with a ~60% reduction this quarter at prices between $49 and $64.PG&E Corporation (PCG): PCG is a 2.27% stake established in Q1 2018 at prices between $38 and $45 and increased by ~43% next quarter at prices between $39 and $47. Q3 2018 saw a stake doubling at prices between $41.50 and $47. Q2 2019 saw another 58% stake increase at prices between $6 and $24. The stock currently trades at $16.20. There was a ~23% selling this quarter at prices between $3.75 and $12.50.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. In September, under a proposed settlement, those claims were to be paid back at 59c on the dollar.Akebia Therapeutics (AKBA): The 1.37% AKBA stake came about as a result of the all-stock merger with Keryx Pharmaceuticals. Baupost had effective ownership of 65.37M shares (includes 39.6M shares of convertible notes they agreed to redeem at a conversion price of $4.17) for which they received 24.47M shares of AKBA (0.37433:1 ratio). Overall their cost-basis is around $19, much higher than the current price of $8.75. This quarter saw a ~20% selling at prices between $3.15 and $6.75.Note: Baupost controls ~17% of Akebia Therapeutics.Synchrony Financial (SYF): SYF, the November 2015 split-off from General Electric (GE) is at 1.19% of the portfolio. It was established in Q3 2016 at prices between $25 and $28.50. Q2 2017 saw a two-thirds increase at prices between $26.50 and $34.50. At the time, it was the second-largest position at ~10% of the portfolio. Q3 2018 saw an about turn: ~44% reduction at prices between $29 and $35. Last three quarters saw the stake sold down by another ~80% at prices between $31.25 and $37.75. The stock currently trades at $33.75.Nuance Communications (NUAN): NUAN is a 0.45% of the portfolio position purchased last quarter at prices between $13.15 and $15.50 and reduced by ~70% this quarter at prices between $14.25 and $18. The stock currently trades at $23.14.Cars.com (CARS): CARS is a June 2017 spinoff from Tegna (TGNA). Shares started trading at ~$25 and currently goes for less than half that at ~$11. The minutely small 0.37% stake saw a ~10% trimming during the quarter.Kept Steady: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 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. Klarman’s stake in Fox Corp is the second-largest in the portfolio at ~13.5%. The stock currently trades at ~$37.ViaSat (VSAT): VSAT is a large (top three) position at ~11% 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. The stock currently trades at ~$61. Q4 2016 saw a ~14% increase at prices between $66 and $81. He is sitting on huge gains on the position.Note: Klarman controls ~23% of VSAT.Cheniere Energy (LNG): LNG is a large 6.84% of the portfolio position. The original stake was established in Q1 2014 at prices between $41 and $55. In H2 2014, it was doubled at prices between $62 and $84. The three quarters thru Q1 2016 saw another stake doubling at prices between $24 and $71. Q4 2016 saw a reversal: 22% sold at prices between $35.50 and $43.50 and that was followed with a roughly one-third reduction in Q2 2018 at prices between $53 and $69. The stock currently trades at ~$55. Last three quarters had also seen a ~30% selling at prices between $58 and $70.Note: Baupost controls ~4% of Cheniere Energy.Tesla Notes: The 4.65% position in Tesla Notes had seen a 20% increase in Q3 2018 and was kept steady since.Theravance Biopharma (TBPH): TBPH is a 2.66% 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. The stock is now at ~$25.Note: Klarman controls ~19% of the business. The 13F also lists a small position in Theravance Biopharma Notes.Colony Capital (CLNY): The 2.61% stake in Colony Capital 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. They control ~10% of CLNY and their overall cost-basis is ~$12.50 per share. CLNY currently trades well below that at $4.96. For investors attempting to follow Baupost, CLNY is a good option to consider for further research.Nexstar Media Group (NXST): The 2.59% NXST position was established in Q4 2018 at prices between $71 and $88 and it is now at ~$126. There was a minor ~5% stake increase Q1 2019 and that was followed with a ~40% stake increase next quarter at prices between $98 and $118. Last quarter saw another ~40% stake increase at prices between $91 and $110.Univar Inc. (UNVR): UNVR is a 2.54% stake established in Q3 2018 at prices between $25.50 and $31 and increased by ~440% next quarter at prices between $16.25 and $31. The stock is now at $22.30. For investors attempting to follow Baupost, UNVR is a good option to consider for further research.Note: Regulatory filings since the quarter ended show them owning 11.03M shares (6.48% of the business). This is compared to 9.5M shares in the 13F report.Translate Bio (TBIO): The 1.56% 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 last quarter at prices between $8 and $12. The stock is now just below those ranges at $7.84. For investors attempting to follow, TBIO is a good option to consider for further research.Note: 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 ~29% of the business.Atara Biotherapeutics (ATRA): ATRA is a 1.51% 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: there was a ~17% stake increase in Q1 2018 at prices between $18 and $48 and that was followed with a ~10% stake increase last quarter at prices between $19 and $41. Last quarter also saw a ~20% stake increase at prices between $12 and $20. The stock currently trades at $14.26. For investors attempting to follow, ATRA is a good option to consider for further research.Note: Klarman controls ~15% of the business.AmerisourceBergen (ABC): ABC was a minutely small position established in Q3 2017. It was built to a 1.30% portfolio stake next quarter at prices between $73 and $94. The stock is now at ~$94. The two quarters thru Q3 2018 had seen a stake doubling at prices between $79 and $95 while next quarter saw a ~25% selling at prices between $71 and $94. There was a ~20% stake increase in Q1 2019 at prices between $73 and $87. Last quarter saw a ~47% selling at prices between $81 and $92. The stake is now at ~1% of the portfolio.Veritiv Corporation (VRTV): VRTV is a 0.73% 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 well below the low end of those ranges at $13.Note: Klarman’s ownership interest in VRTV is ~23%.Vista Oil & Gas (VIST) and Trilogy Metals (TMQ): These two very small stakes were kept steady during the quarter. VIST had an IPO in July 2019. Shares started trading at $9.25 and currently goes for $7.60.Note 1: Regulatory filings since the quarter ended show them owning 8.33M shares of Vistal Oil & Gas (9.36% of the business). This is compared to 6.18M shares in the 13F report.Note 2: Baupost controls ~9% Trilogy Metals.The spreadsheet below highlights changes to Klarman's 13F stock holdings in Q4 2019:Q4 2018  - The Baupost partnerships returned between roughly breakeven and a decline of less than one percent for the year ended December 31.Regulatory filings thru 11/14/2019: Form 3, 13D – 9/20 – TBIO – 17.54M shares – 29.2% of business, 13G/A – 9/9 – 12.27M shares – 24.06% of business.9/13/2019 –  linked from  – “Public records reviewed by The Wall Street Journal indicate Baupost stands to make hundreds of millions of dollars from its investment in insurance claims tied to the wildfires that pushed PG&E into chapter 11. Under a proposed settlement unveiled Friday, those insurance claims will be paid back at roughly 59 cents on the dollar, roughly twice what Baupost paid for some of them, records show…. A PG&E spokesperson said the new deal was an “agreement in principle” and the company would announce additional details when a full written settlement is reached.” 7/25/2019 – per , Klarman has $3.4B in subrogation claims, $438M in common stock, and other investments. He has also proposed a restructuring plan.6/25/2019 – per , Klarman’s cost-basis on Allergan is $208.61."