"Tracking Seth Klarman’s Baupost Group Holdings – Q1 2022 Update"
"Seth Klarman’s 13F portfolio value decreased from $10.13B to $9.30B this quarter.Baupost Group increased Fiserv, Dropbox, Encompass Health, Nuvation Bio, and IronSource while reducing Joby Aviation and dropping Pershing Square Tontine and NortonLifeLock.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 5/13/2022. 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 2021.Baupost Group’s 13F portfolio value decreased ~8% from $10.13B to $9.30B this quarter. The total number of 13F securities increased from 54 to 55. The portfolio is heavily concentrated with Liberty Global, Qorvo, Intel, ViaSat, and Liberty Media Sirius XM together accounting for ~52% 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), Archea Energy (LFG), Aurora Innovation (AUR) wts, Avanti Acquisition (AVAN) & wts, Cazoo Group (CZOO) wts, Cullinan Oncology (CGEM), Cvent (CVT), Ermenegildo Zegna (ZGN) wts, Finch Therapeutics Group (FNCH), Garrett Motion (GTX), Grab Holdings (GRAB), Gray Television (GTN), Hippo Holdings (HIPO) wts, Horizon Acquisition II (HZON) wts, Liberty Media Acquisition Corp (LMACA) & wts, Noble Corp (NE), Outbrain Inc. (OB), Pershing Square Tontine (PSTH) wts, Post Holdings (PSPC), Redball Acquisition Corp (RBAC) wts, SVF Investment Corp (SVFA) & wts, Trilogy Metals (TMQ), and Vertical Aerospace (EVTL) wts. 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 ~32% of Garrett Motion (GTX) and ~14% of Just Eat Takeaway (GRUB). GTX emerged from Chapter 11 bankruptcy in May. Baupost started buying shares last November when it was trading below $3. It currently trades at $5.96. The bulk of the ownership is through a series A preferred share offering.Stake Disposals:Pershing Square Tontine (PSTH): PSTH was a 1.86% 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. 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 in Q2 2021 at prices between ~$22 and ~$25.50. The disposal this quarter was at prices between $19.75 and $19.92. The stock currently trades at $19.84.Note: they still own a small stake in the warrants.NortonLifeLock (NLOK): The 1.48% of the portfolio stake in NLOK was established last quarter at prices between ~$24 and ~$27. It was sold this quarter at prices between ~$25 and ~$31. The stock is now at $23.95.Stake Increases:Qorvo Inc. (QRVO): QRVO is a large (top three) 8.87% 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 another ~31% stake increase at prices between ~$119 and ~$178. The stock is now at ~$105.Note: They have a ~6% ownership stake in the business.Liberty Media Sirius XM (LSXMK): The 8.25% LSXMK stake was primarily built in Q3 2020 at prices between $32 and $37. Q4 2020 saw a ~14% stake increase. Last three quarters have seen another ~68% stake increase at prices between ~$44 and ~$56. The stock currently trades at $39.44.Alphabet Inc. (GOOG) (GOOGL): The 7.32% GOOG stake was purchased in Q1 2020 at prices between $1057 and $1527 and the stock currently trades at ~$2330. 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. Last quarter saw a ~22% trimming at prices between ~$2665 and ~$3014 while this quarter there was a ~7% increase.Fiserv Inc. (FISV): FISV is a 4.35% of the portfolio position purchased last quarter at prices between ~$96 and ~$111 and the stock currently trades at the low end of that range at ~$96. There was a ~30% stake increase this quarter at prices between ~$93 and ~$110.Dropbox Inc. (DBX): DBX is a 2.64% of the portfolio position established in Q3 2021 at prices between ~$28 and ~$32.50 and the stock currently trades below that range at $20.77. There was a ~13% trimming last quarter. This quarter saw a ~30% stake increase at prices between ~$20 and ~$25.Encompass Health (EHC): The 2.29% stake in EHC was primarily built this quarter at prices between ~$60 and ~$70. The stock is now at ~$64.Nuvation Bio (NUVB): NUVB is a 0.59% of the portfolio stake established in Q1 2021 following their de-SPAC transaction that closed last February. The stock currently trades at ~$4. There was a ~20% stake increase this quarter at prices between ~$4.50 and ~$8.83.Note: Nuvation Bio is an oncology startup whose founding team came from Medivation. Their 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.IronSource Ltd. (IS): Thoma Bravo Advantage was a SPAC that had a ~$1B IPO in January 2021. In March 2021, they announced the merger with IronSource. The transaction closed in June. Baupost established the original stake in Q1 2021. The position was doubled in Q2 2021 at prices between ~$10 and ~$11. Last quarter saw a ~50% selling at prices between ~$7.50 and ~$12.50 while this quarter there was a stake doubling at prices between $4.55 and $7.94. The stock currently trades at $2.80.Stake Decreases:Intel Corp (INTC): INTC is a large (top three) 8.84% 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 $43.60. Last four quarters have seen a ~30% selling at prices between ~$44 and ~$68.Willis Towers Watson (WLTW): WLTW is a 3.13% of the portfolio stake established in Q1 2021 at prices between ~$200 and ~$235 and the stock currently trades at ~$206. The two quarters through Q3 2021 saw a ~60% selling at prices between ~$202 and ~$270 while last quarter there was a ~25% stake increase at prices between ~$226 and ~$249. There was marginal trimming this quarter.SS&C Technologies (SSNC): SSNC is a ~3% position built in Q3 2020 at prices between ~$56 and ~$65 and it is now at $59.82. The two quarters through Q1 2021 had seen a ~25% stake increase at prices between ~$63 and ~$71. Q2 2021 saw a ~13% trimming while next quarter there was a similar increase. There was marginal trimming this quarter.Micron Technology (MU): MU is a 2.61% of the portfolio position purchased in Q3 2020 at prices between $42.50 and $52.65 and the stock currently trades at $71.92. Q2 2021 saw a one-third increase at prices between ~$77 and ~$96 while last quarter there was a ~55% selling at prices between ~$66 and ~$96. There was minor trimming this quarter.Nexstar Media Group (NXST): The 2.33% 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 ~$172. Last two quarters have seen a ~45% selling at prices between ~$143 and ~$190.Meta Platforms (FB) previously Facebook: FB is a 2.32% 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 three quarters through Q3 2021 at prices between ~$245 and ~$355 while last quarter there was a ~36% reduction at prices between ~$307 and ~$348. The stock is now at ~$199. There was marginal selling this quarter.DigitalBridge (DBRG) previously Colony Capital: The 1.42% 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. This quarter saw another ~20% selling at prices between ~$6.60 and ~$8.25. Their overall cost-basis is ~$12.50 per share. DBRG currently trades at $5.94.Note: Baupost owns ~5.4% of DigitalBridge.Theravance Biopharma (TBPH): TBPH is a 1.40% 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 two quarters through Q3 2021 saw a ~50% stake increase at prices between ~$7 and ~$22.50. The stock is now at $9.12. There was marginal trimming this quarter.Note: The stock dropped ~50% last 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. There is speculation that GlaxoSmithKline (GSK) is considering a merger deal. Klarman controls ~20% of the business. The 13F also lists a small position in Theravance Biopharma Notes.Verint Systems (VRNT): The 1.23% VRNT stake was built in Q3 2020 at prices between ~$42 and ~$51 and the stock currently trades at $51.12.  Q1 2021 saw a ~20% stake increase at prices between ~$33.50 and ~$52. That was followed with a ~15% increase Q3 2021 at prices between ~$42 and ~$46. Last quarter also saw a minor ~6% stake increase. There was a ~40% selling this quarter at prices between ~$48 and ~$54.Atara Biotherapeutics (ATRA): ATRA is a 0.81% 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 two quarters through Q1 2021 had seen a combined ~15% trimming. The stock currently trades at $5.48. This quarter saw a minor ~4% trimming.Note: Klarman controls ~8.5% of the business.Advantage Solutions (ADV): The 0.80% ADV stake was established in Q4 2020 at prices between $8.75 and $13.35. The stock currently trades at $4.42. This quarter saw marginal selling.Archaea Energy (LFG): The small 0.70% of the portfolio LFG stake was purchased in Q3 2021 at prices between ~$14.50 and ~$20 and it is now at $18.66. This quarter saw a ~11% trimming.Note: Archaea Energy is a De-SPAC that started trading last September following the close of their merger with Rice Energy Acquisition. Baupost controls ~5.8% of Archaea Energy.Joby Aviation (JOBY): JOBY position saw a roughly two-thirds stake increase in Q3 2021 at prices between $8.15 and $13.40. The stock is now at $5.33. The stake was sold down by ~80% this quarter to a minutely small position at prices between $3.63 and $7.48.Note: Joby Aviation is a De-SPAC that started trading last August following the close of its merger transaction with Reinvent Technology Partners.Kept Steady:Liberty Global (LBTYK) (TBTYA): LBTYK is currently the largest position at 17.14% 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. Since then, the activity has been minor. The stock currently trades at $24.07.ViaSat (VSAT): VSAT is a large (top five) position at 8.55% of the portfolio. 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 $37.90.Note: Baupost controls ~22% of the business.Veritiv Corporation (VRTV): VRTV is a 5.12% 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 ~$144.Note: Klarman’s ownership interest in VRTV is ~23%.The spreadsheet below highlights changes to Klarman's 13F stock holdings in Q1 2022:Source: John Vincent. Data constructed from Baupost Group’s 13F filings for Q4 2021 and Q1 2022.Regulatory filings from 11/14/2021 to 2/14/2022: 13G – 2/14 – GRUB – Just Eat Takeaway – 14.04% of business – 6.6% of business. The Nasdaq listed ADRs are delisting in Q1 2022. 13G/A – 2/11 – AVAN – 4M shares – 6.67% of business. 13G/A – 2/11 – DBRG – 35.79M shares – 6.8% of business. 13G/A – 2/11 – PSTH – 9.55M shares – 4.78% of business. 13G/A – 2/11 – HZON – 0. 13G – 2/11 – AGCB – 2.5M shares – 5.42% of business. 13G – 2/11 – LMACA – 3.2M shares – 5.57% of business. 13G/A – 2/11 – RBAC – 0. 13G/A – 2/11 – AJAX – 0. 13G/A – 2/11 – TMQ – 11.71M shares – 8.11% of business. 13G – 2/11 – QRVO – 5.95M shares – 5.39% of business. 13G – 2/11 – LFG – Archaea Energy – 3.5M shares – 6.53% of business. 13G/A – 2/11 – SKIN – Beauty Health – 0. 13D/A – 2/11 – IIAC – InvestIndustrial/Zegna – 0. 13G/A – 2/11 – BSN – Broadstone/EVTL – 0. 13G/A – 2/11 – TBPH – 14.53M shares – 19.49% of business. 13G – 2/11 – VRNT – Verint – 3.75M shares – 5.72% of business. 13G – 2/11 – Liberty Media – 4.975M shares – 5.15% of business. 13G/A – 2/9 – ATRA – 8.12M shares – 9.19% of business. Form 4, 13D/A – 12/14 – GTX – Garrett Motion – 3.575M shares – 29.06M shares – 32.09% of business."