"Tracking Seth Klarman’s Baupost Group Holdings – Q1 2020 Update"
"Seth Klarman’s 13F portfolio value decreased from $9.06B to $6.77B this quarter.Baupost Group increased eBay, HP, and ViacomCBS while dropping Bristol Myers Squibb and Synchrony Financial. They also added large positions in Alphabet and Facebook during the quarter.The portfolio continues to be heavily concentrated with the top three positions accounting for ~40% 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 05/14/2020. Please visit our  article for an idea on how his holdings have progressed over the years and our  for the fund's moves during Q4 2019.Baupost Group’s 13F portfolio value decreased ~25% from $9.06B to $6.77B this quarter. The total number of 13F securities increased from 29 to 30. The portfolio is heavily concentrated with Liberty Global, eBay Inc., Fox Corp, ViaSat, and Alphabet together accounting for ~53% 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 had gone up to ~31% as of EOY 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:Alphabet Inc. (GOOG) (GOOGL) and Facebook Inc. (FB): These two are large new positions established this quarter. The 5.16% GOOG stake was purchased at prices between $1057 and $1527 and the stock currently trades at $1373. FB is a 4.89% of the portfolio position established at prices between $146 and $223 and it is now at $211.HD Supply Holdings (HDS): HDS is a 2.61% of the portfolio position purchased this quarter at prices between ~$23 and ~$43 and the stock currently trades at $27.30.Liberty Media Sirius XM (LSXMK), Energy Transfer LP (ET), XPO Logistics (XPO), and Spirit AeroSystems (SPR): These are very small (less than ~1% of the portfolio each) stake established this quarter.Stake Disposals: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. There was a ~23% selling in Q3 2019 at prices between $42.50 and $51. That was followed with a ~60% reduction last quarter at prices between $49 and $64. The disposal this quarter was at prices between $46.40 and $67.50. The stock is now at ~$64.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 elimination this quarter was at prices between $12.80 and $36.50. The stock currently trades at $16.54.Nuance Communications (NUAN): NUAN was a 0.45% of the portfolio position purchased in Q3 2019 at prices between $13.15 and $15.50 and reduced by ~70% last quarter at prices between $14.25 and $18. The stock currently trades at ~$20. The position was sold out this quarter at prices between ~$14 and ~$23.Eldorado Resorts (ERI) and McDermott International (MDRIQ): These are minutely small positions established last quarter but disposed 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 in January. Baupost also has a position in McDermott debt.Tesla Notes: The 4.65% position in Tesla Notes had seen a 20% increase in Q3 2018 and was kept steady since. The stake was disposed during the quarter.Stake Increases:Liberty Global (LBTYK) (TBTYA): LBTYK is currently the largest position at ~14% 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 near the low end of those ranges at $21.36. Last quarter also saw a ~16% stake increase while this quarter there was a marginal further increase. For investors attempting to follow, LBTYK is a good option to consider for further research.eBay Inc. (EBAY): EBAY is a large (top three) ~14% 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 in Q3 2019 at prices between $38 and $42. Last quarter saw a ~20% stake increase at prices between $34.50 and $39.25. That was followed with a ~60% increase this quarter at prices between $26.34 and $38.50. The stock currently trades at $42.11.Note: Starboard Value has an activist position in eBay. They ended their proxy fight last month following eBay’s hiring of new CEO Jamie Iannone.HP Inc. (HPQ): HPQ is a large 5.13% of the portfolio stake established last quarter at prices between $16 and $20.75 and doubled this quarter at prices between ~$13 and ~$23. The stock currently trades near the low end of those ranges at $14.86. For investors attempting to follow, HPQ is a good option to consider for further research.ViacomCBS (VIAC) previously CBS Corporation: VIAC is a fairly large 4.65% 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 had also seen a stake doubling at prices between $35.50 and $53.50. This quarter also saw a one-third further increase at prices between $11.25 and $42. The stock currently trades at ~$17.30. For investors attempting to follow, VIAC is a good option to consider for further research.Qorvo Inc. (QRVO): QRVO is a 3.65% 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 $94.71. Last three quarters had seen a ~75% selling at prices between $60 and $118. There was a ~11% stake increase this quarter.McKesson Corp. (MCK): MCK is a 3.33% 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 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 in Q3 2019: ~50% reduction at prices between $134 and $149. That was followed with a ~20% stake increase last quarter at prices between $130 and $153. This quarter also saw a ~5% further increase. The stock currently trades at ~$137.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.Nexstar Media Group (NXST): The 2.59% 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 ~$73. This quarter saw a minor increase.Cars.com (CARS): CARS is a June 2017 spinoff from Tegna (TGNA). Shares started trading at ~$25 and currently goes for $5.29. The minutely small 0.19% stake saw a ~10% trimming last quarter and a similar increase this quarter.Stake Decreases:Cheniere Energy (LNG): LNG is a ~4% 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 three quarters thru Q3 2019 had also seen a ~30% selling at prices between $58 and $70. There was another ~20% reduction this quarter at prices between $30 and $66. The stock currently trades at $41.27.Akebia Therapeutics (AKBA): The ~2% 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 $12.42. Last quarter saw a ~20% selling at prices between $3.15 and $6.75 and that was followed with a ~10% trimming this quarter.Note: Baupost controls ~14% of Akebia Therapeutics.PG&E Corporation (PCG): PCG is a 1.29% 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 $11.33. There was a ~23% selling last quarter at prices between $3.75 and $12.50. That was followed with a ~50% reduction this quarter at prices between $7.25 and $18.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.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 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. Q3 2019 saw a ~47% selling at prices between $81 and $92. This quarter saw a ~20% reduction at prices between $74 and $97. The stake is now at 1.22% of the portfolio and the stock is at $85.75.Univar Inc. (UNVR): UNVR is a ~1% 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 position was sold down by ~40% this quarter at prices between ~$7 and ~$24. The stock is now at $12.53.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 third-largest in the portfolio at 11.45%. The stock currently trades at ~$25.50.ViaSat (VSAT): VSAT is a large (top five) position at 7.28% 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 ~$35. Q4 2016 saw a ~14% increase at prices between $66 and $81.Note: Klarman controls ~23% of VSAT.Theravance Biopharma (TBPH): TBPH is a 3.18% 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 $27.41.Note: Klarman controls ~19% of the business. The 13F also lists a small position in Theravance Biopharma Notes.Translate Bio (TBIO): The 2.53% 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. The stock is now at ~$16.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 ~28% of the business.Colony Capital (CLNY): The 1.28% 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 $1.52.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: 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. Q3 2019 also saw a ~20% stake increase at prices between $12 and $20. The stock currently trades at $10.76. For investors attempting to follow, ATRA is a good option to consider for further research.Note: Klarman controls ~15% of the business.Veritiv Corporation (VRTV): VRTV is a 0.41% 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 $9.34.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 $3.30.Note: Baupost controls ~9% each of Trilogy Metals and Vista Oil & Gas.The spreadsheet below highlights changes to Klarman's 13F stock holdings in Q1 2020:1/22/2020 –  reporting on Seth Klarman’s year-end letter - Klarman noted that about 31% of the fund’s portfolio was in cash to end 2019. However, according to this latest report, Baupost managed only high-single-digit returns last year, citing a “few mistakes” he made along with “conservative positioning,”Regulatory filings thru 2/14/2020: 13G & 13G/A on 2/13 – NXEO – 0, QRVO – 2.75M shares – 2.37% of business, VIST – 8.33M shares – 9.36% of business, TMQ – 12.18M shares – 8.7% of business, UNVR – 11.03M shares – 6.48% of business, ATRA – 8.31M shares – 15.34% of business, AKBA – 19.57M shares – 16.45% of business, AR – 0, 12/9/2019 – PRTK – 1.55M shares – 4.66% of business."