"Tracking Seth Klarman’s Baupost Group Holdings – Q4 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 02/13/2014. Please visit our  article for an idea on how his holdings have progressed over the years and our  highlighting the fund's moves during Q3 2013.Klarman’s US long portfolio increased marginally from ~$3.50B to ~$3.53B this quarter. The very large position in Micron Technology established in Q2 2013 and increased by ~50% last quarter was reduced this quarter - but, it still has a whopping 31.83% allocation. The number of holdings in the US long portfolio remained steady at 19: small positions in Central Pac Financial Corporation, Ituran Location and Control, and Oracle Corporation were replaced with Alon USA Partners LP, Fidelity National Financial, and Kindred Biosciences. Although there are 19 positions, the portfolio is heavily concentrated: Micron Technology, Theravance Inc., and Viasat Inc. together account for over 70% of the 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:Kindred Biosciences (KIN): KIN is a very small 0.92% of the US long portfolio position established this quarter at an average cost-basis of around $11. The stake as a percentage of the business is very high at 17.93%: 2.9M shares out of the ~15M shares outstanding. The position was disclosed in a 13G filing on 01/09/2014 and that immediately aroused speculative interest that resulted in a huge price-spike. The stock currently trades at over $19.Fidelity National Financial (FNF): FNF is a small 1.82% of the US long portfolio position established this quarter at prices between $25.76 and $32.94. The stock currently trades at $32.28.Alon USA Partners LP (ALDW): ALDW is a minute 0.16% of the US long portfolio position established this quarter at prices between $10.57 and $17.51. The stock currently trades at $14.76. As the position size is too small, the stake establishment does not indicate a clear bias.Stake Disposals:Oracle Corporation (ORCL): ORCL was a 2.26% 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 in Q2 2013. The pattern continued last quarter with a stake reduction of another 30% at prices between $30 and $34. The position was eliminated this quarter at prices between $32.19 and $38.26. The stock currently trades at around $38.42. The activity signifies a clear bearish bias.Central Pac Financial Corp. (CPF) & Ituran Location and Control (ITRN): CPF and ITRN were very small positions. They were eliminated this quarter. As the position sizes were very small, the activity does not represent a clear bias.Stake Increases:BP PLC (BP): BP was Klarman’s second largest 13F position and represented 19.30% of the US long portfolio as of Q2 2013: the huge stake build-up from 2012 onwards happened at prices between $36 and $49. Last 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 at $48.45. The stake was marginally increased this quarter but the large stake disposal last quarter indicates a bearish bias.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 position was increased by ~10% this quarter. The bulk of the 1.92% 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.Idenix Pharmaceuticals (IDIX): IDIX is a 6.25% 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 bulk of the position was purchased at prices between $2.93 and $5.93 since Q2 2012. This quarter saw a ~25% stake increase at prices between $3.56 and $4.85.Seth Klarman disclosed in a regulatory 13D filing on 02/04/2014 that he has further increased the stake to 53.33M shares (35.38% of the shares outstanding - 16.42M additional shares purchased at $6.50 per share).The significant stake increase over several quarters indicates a clear bullish bias.PBF Energy (PBF): PBF is a small 1.76% of the US long portfolio position first purchased last quarter at prices between $21 and $26. It was more than doubled this quarter at prices between $21.44 and $31.46. The stock currently trades near the middle of that range at $25.26. The stake build-up indicates a mild bullish bias.Theravance Inc (THRX): THRX is a large 20.35% of the US long portfolio position that was increased by 12% last quarter at prices between $35.80 and $42.64. The stake was increased by over 20% in Q2 2013 as well at prices between $22.50 and $42. This quarter saw a further ~9% stake increase at prices between $33.74 and $41.53. It currently trades at around $38.47. THRX is a very long-term position that has been in the portfolio since 2008. The stock was up around 60% in 2013 - the price spiked in May following a $1B royalty deal with Elan PLC. Baupost controls around 18.22% of the businessViasat (VSAT): VSAT is currently Klarman’s third-largest US long position accounting for 19.76% of the portfolio. Since Q3 2012, the position has seen only very minor stake increases. This quarter also saw a marginal increase. 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 $57.26. He is sitting on huge gains on the position. The stock was up ~60% in 2013, but Klarman is continuing to hold on.Stake Decreases:Micron Technology (MU): MU is a huge 31.83% of the US long portfolio position established in Q2 2013 at prices between $9.10 and $14 and increased by just over 50% last quarter at prices between $12.55 and $17.60. The stock currently trades outside those ranges at around $24.91. This quarter saw a ~20% stake reduction at prices between $16.55 and $23.14. Klarman is sitting on large short-term gains on the position and he is opportunistically cashing out.On 02/13/2014, Baupost disclosed in a regulatory 13G filing that they have since increased the position by ~10% to 61.66M shares (5.83% of the shares outstanding).Rovi Corporation (ROVI): ROVI is a 1.21% of the US long portfolio stake that was reduced by 65% this quarter at prices between $16.47 and $19.80. The original position was established in Q3 2012 at prices between $10.01 and $19.14. The stake was almost doubled in Q1 2013 at prices between $15.43 and $21.43. In Q2 2013, the position was reduced by ~25% at prices between $20 and $26.50 but was kept steady last quarter. The stock currently trades at around $23.45. The activity indicates a bearish bias.Enzon Pharmaceuticals Inc. (ENZN): ENZN is a minute 0.14% of the US long portfolio position that was reduced by ~44% this quarter. Although the position size relative to the size of the portfolio is very small, Klarman still owns 9.84% of the outstanding shares.The rest of the portfolio remained steady during the quarter:ChipMOS Technologies (IMOS): IMOS is a small 1.79% of the US long portfolio position established in Q2 2013 at prices between $12.30 and $20 and increased by ~19% last quarter at prices between $15 and $21. The stock currently trades at around $20.51. Although the relative sizing of the position is small, it is significant that Klarman owns 9.84% of the shares outstanding.Alliance One International (AOI): AOI is a very small position (0.55% of the US long portfolio - 7.24% of the shares outstanding) that was reduced by ~17% last quarter and kept steady this quarter. As the position size is very small, the activity does not indicate a clear 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. Q2 2013 saw a turnaround, as the position was trimmed by 15% at prices between $37.50 and $46. Last quarter, the position was almost eliminated at prices between $44 and $51. The remaining 0.38% stake was kept steady this quarter. The stock currently trades at around $50.Novagold Resources Inc (NG): NG is a 1.25% 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 at around $3.27. Klarman is sitting tight in the face of a large price-drop on this position.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 Q4 2013:"