"Tracking Seth Klarman’s Baupost Group Holdings – Q3 2021 Update"
"Seth Klarman’s 13F portfolio value decreased from $12.33B to $10.88B this quarter.Baupost Group increased Liberty Sirius XM, Theravance Biopharma, and Joby Aviation while decreasing eBay, Willis Towers Watson, International Flavors & Fragrances, and PG&E.The portfolio continues to be heavily concentrated with the top three positions accounting for ~35% 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 11/12/2021. Please visit our  article for an idea on how his holdings have progressed over the years and our  for the fund's moves during Q2 2021.Baupost Group’s 13F portfolio value decreased ~12% from $12.33B to $10.88B this quarter. The total number of 13F securities decreased from 59 to 57. The portfolio is heavily concentrated with Liberty Global, Intel, ViaSat, Qorvo, and Alphabet and together accounting for ~50% 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, many of which are SPAC common shares and/or warrants. Those positions are Altimeter Growth Corp II (AGCB), Avanti Acquisition (AVAN) & wts, Broadstone Acquisition (BSN) & wts, Cazoo Group (CZOO), Dragoneer Growth Opportunities II (DGNS), Dragoneer Growth Opportunities III (DGNU), Finch Therapeutics Group (FNCH), Garrett Motion (GTX), Hippo Insurance (HIPO) & wts previously Reinvent Technology Partners Z, Horizon Acquisition II (HZON) & wts, InvestIndustrial Acquisition (IIAC) & wts, Liberty Media Acquisition Corp (LMACA) & wts, Noble Corp (NE), Outbrain Inc. (OB), Pershing Square Tontine (PSTH) wts, Redball Acquisition Corp (RBAC) wts, SVF Investment Corp (SVFA) & wts, and Trilogy Metals (TMQ). 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: They own ~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:Dropbox Inc. (DBX) and Archaea Energy (LFG): These are the new stakes this quarter. DBX is a 2.49% of the portfolio position established this quarter at prices between ~$28 and ~$32.50 and the stock currently trades just below that range at ~$27. The small 0.54% of the portfolio LFG stake was purchased at prices between ~$14.50 and ~$20 and it is now at $20.75.Note: Archaea Energy is a De-SPAC that started trading in September following the close of their merger with Rice Energy Acquisition.Stake Disposals: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. Sanofi (SNY) acquired Translate Bio in a $38 per share all-cash deal that closed in September. Translate Bio’s primary asset is mRNA technology that originally came from Shire plc.Stake Increases:Liberty Media Sirius XM (LSXMK): The 5.87% LSXMK stake was primarily built in Q3 2020 at prices between $32 and $37. Q4 2020 saw a ~14% stake increase and that was followed with a ~35% increase this quarter at prices between ~$44 and ~$50. The stock currently trades at ~$55.SS&C Technologies (SSNC): SSNC is a 2.43% position built in Q3 2020 at prices between ~$56 and ~$65 and it is now at ~$79. The two quarters through Q1 2021 had seen a ~25% stake increase at prices between ~$63 and ~$71. Last quarter saw a ~13% trimming while this quarter there was a similar increase.Verint Systems (VRNT): The 1.45% VRNT stake was built in Q3 2020 at prices between ~$42 and ~$51 and the stock currently trades at $47.43.  Q1 2021 saw a ~20% stake increase at prices between ~$33.50 and ~$52. That was followed with a ~15% increase this quarter at prices between ~$42 and ~$46.Theravance Biopharma (TBPH): TBPH is a 0.93% 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. Last two quarters have seen another ~50% stake increase at prices between ~$7 and ~$22.50. The stock is now at $8.20.Note: The stock dropped ~50% in August after a clinical setback – ampreloxetine missed primary endpoint in orthostatic hypotension study. In September, they announced a ~75% headcount reduction to focus on their respiratory assets.  Klarman controls ~27% of the business. The 13F also lists a small position in Theravance Biopharma Notes.Joby Aviation (JOBY): JOBY is a 0.88% of the portfolio position that saw a roughly two-thirds stake increase this quarter at prices between $8.15 and $13.40. The stock is now at $9.10.Note: Joby Aviation is a De-SPAC that started trading in August following the close of its merger transaction with Reinvent Technology Partners.Stake Decreases:Intel Corp (INTC): INTC is a large (top three) ~10% of the portfolio stake established in Q4 2020 at prices between ~$44 and ~$55. Q1 2021 saw a ~28% stake increase at prices between ~$50 and ~$66. The stock currently trades at $50.31. Last two quarters have seen a ~18% trimming.Qorvo Inc. (QRVO): QRVO is a large (top five) 7.81% 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 next quarter. Last two quarters have seen only minor adjustments. The stock is now at ~$161.eBay Inc. (EBAY): EBAY is currently at 3.83% 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 three quarters have seen a ~80% reduction at prices between ~$50.50 and ~$78. The stock currently trades at ~$74.Willis Towers Watson (WLTW): WLTW is a 2.14% of the portfolio stake established in Q1 2021 at prices between ~$200 and ~$235 and the stock currently trades at ~$231. Last two quarters saw a ~60% selling at prices between ~$202 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 following monopoly concerns raised by regulators.Pershing Square Tontine (PSTH) and warrants (PSTHWS): PSTH is a 1.73% of the 13F portfolio stake established in Q3 2020. Pershing Square Tontine is a ~$4B SPAC that had an IPO in July 2020. The units started trading at ~$21.50. Separate trading of the stock and warrants started around mid-September. They currently trade at $19.83 and $1.80 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 last quarter at prices between ~$22 and ~$25.50. This quarter also saw minor trimming.International Flavors & Fragrances (IFF): IFF is a 1.53% of the portfolio position established in Q1 2021 at prices between ~$105 and ~$141. There was a ~40% selling this quarter at prices between ~$132 and ~$157. The stock is now at ~$153.PG&E Corporation (PCG): PCG is a 0.64% 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. There was a ~75% reduction this quarter at prices between $8.30 and $10.50. The stock currently trades at $12.26.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.Kept Steady:Liberty Global (LBTYK) (TBTYA): LBTYK is currently the largest position at 16.70% 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 $28.74.ViaSat (VSAT): VSAT is a large (top three) position at 8.24% 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. In July 2020, Baupost participated in ViaSat’s 4.47M share private placement by acquiring ~2.56M shares at ~$39 per share. The stock currently trades at $53.59.Note: Baupost controls ~22% of the business.Alphabet Inc. (GOOG) (GOOGL): The 7.12% GOOG stake was purchased in Q1 2020 at prices between $1057 and $1527 and the stock currently trades at ~$2974. Last three quarters of 2020 had seen a ~75% selling at prices between ~$1098 and ~$1830. There was a ~265% stake increase in Q1 2021 at prices between ~$1725 and ~$2100.Meta Platforms (FB) previously Facebook: FB is a 4.82% 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 ~$341.Micron Technology (MU): MU is a 4.67% of the portfolio position purchased in Q3 2020 at prices between $42.50 and $52.65 and the stock currently trades at $77.30. Last quarter saw a one-third increase at prices between ~$77 and ~$96.Veritiv Corporation (VRTV): VRTV is a 2.93% 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 ~$153.Note: Klarman’s ownership interest in VRTV is ~23%.Nexstar Media Group (NXST): The 2.86% 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 ~$168. There was a minor ~2% trimming last quarter.Atara Biotherapeutics (ATRA): ATRA is a 1.39% 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 $17.62. The two quarters through Q1 2021 had seen a combined ~15% trimming.Note: Klarman controls ~10% of the business.DigitalBridge (DBRG) previously Colony Capital: The 1.27% 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 $7.56.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 in Q1 2021. The position was doubled last quarter at prices between ~$10 and ~$11. The stock currently trades at $11.05.Advantage Solutions (ADV): The ~1% ADV stake was established in Q4 2020 at prices between $8.75 and $13.35. The stock currently trades at ~$9.Nuvation Bio (NUVB) and Cullinan Oncology (CGEM): NUVB is a 0.78% of the portfolio stake established in Q1 2021 following their de-SPAC transaction that closed last October. The stock currently trades at $9.40. CGEM is a very small 0.37% of the portfolio position. They had an IPO in January. Shares started trading at ~$35 and currently goes for $21.17. 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 - after going revenue-less for almost a decade, Medivation came up with the blockbuster drug XTANDI (late-stage prostate cancer treatment). Pfizer then acquired them in 2015 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 Q3 2021:Source: John Vincent. Data constructed from Baupost Group’s 13F filings for Q2 2021 and Q3 2021.Regulatory filings from 5/19 thru 8/15/2021: 13G – 8/9 – Outbrain Inc. – OB – 10.23M shares – 16.17% of business. 13D/A – 8/4 – TBIO – 18.04M shares – 24% of business."