Seth Klarman’s 5 Most Profitable


Seth klarman (Trades, Portfolio) founded The Baupost Group in 1983, which ranked it among Forbes’ most profitable hedge fund managers in 2017. Its strategy spans a wide range of investments, from traditional value stocks to debt in difficulty, going through liquidations and foreign bonds. . Klarman is happy to hold cash when investment opportunities are scarce and had almost half of his portfolio on the sidelines in 2005 and 2006. He cautions investors against focusing on returns while ignoring returns. risks that can be incurred while investing.

Based on Klarman’s investment philosophy, he owns five holdings that have generated an estimated total gain of over 70% in less than a decade. These holdings include eBay Inc. (EBAY, Financial), Micron Technology Inc. (UM, Financial), Veritiv Corp. (VRTV, Financial), Trilogy Metals Inc. (TMQ, financial) and Translate Bio Inc. (TBIO, Financial).

eBay

The Guru’s third largest holdings were created in the second quarter of 2014, with stocks trading at an average price of $ 21.80 during the quarter. The stake saw several big additions over the next two quarters, but was sold in the fourth quarter of 2015. It was then re-established at the end of 2018 when the shares traded at an average price of $ 29.29. Since then, equity has swelled to a peak of 32.08 million shares and was reduced to 14.89 million shares in the last quarter. Overall, Klarman bought shares at an average price of $ 30.93 per share, earning him an estimated total gain on the holding of 71.55%.

EBay operates one of the largest e-commerce markets in the world, with $ 85 billion in gross merchandise volume in 2020, or GMV, making it the fifth largest e-commerce company in the world. eBay generates revenue from listing fees, advertising, revenue sharing agreements with service providers, and managed payments. Its platform connects more than 159 million buyers and 19 million sellers in nearly 190 global markets. The company generates around 55% of its GMV in international markets (compared to 45% in the United States), with a strong presence in the United Kingdom, Germany and Australia.

On September 16, the stock was trading at $ 74.01 per share with a market cap of $ 48.14 billion. According to the GF Value Line, the stock is trading at a slightly overvalued rating.

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GuruFocus gives the company a financial strength rating of 5 out of 10, a profitability rating of 7 out of 10 and a review rating of 4 out of 10. There are currently two serious warning signs issued for a Beneish M -Score which indicates that the company can manipulate its finances and a declining operating margin. Despite the warning sign, the company’s operating margin beats 96.22% of competitors and its net margin is faring even better.

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Klarman is the largest shareholder guru with 2.19% of the shares outstanding. Other major eBay gurus shareholders (EBAY, financial) include

Bill Nygren (Trades, Portefeuille), Pioneer Investments, Primecap Management, the

Smead Value Fund (trades, portfolio) and

Jim simons (businesses, portfolio) ‘Renaissance Technologies.

Micron

Klarman first established his Micron (UM, financial) in the second quarter of 2013 with the purchase of 41.5 million shares. After adding 54.22% in the third quarter of 2013, the guru pulled several big chunks from the position until it was fully sold in early 2016. Klarman bought out Micron in the third quarter of 2020, the shares trading at an average price of $ 48.39. Overall, the guru paid $ 16.89 per share on average, well below current stock prices, earning him an estimated total gain of 80.03% on the position.

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Micron has historically focused on the design and manufacture of DRAM for PCs and servers. The company then expanded into the NAND flash memory market. It increased its DRAM scale with the purchase of Elpida (completed in mid-2013) and Inotera (completed in December 2016). The company’s DRAM and NAND products are suitable for PCs, data centers, smartphones, game consoles, automobiles and other computing devices.

As of September 16, the stock was trading at $ 74.66 per share with a market cap of $ 84.05 billion. The GF value line shows that stocks are trading at a slightly overvalued rating.

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GuruFocus gives the company a financial strength rating of 7 out of 10, a profitability rating of 8 out of 10 and a valuation rating of 4 out of 10. There is currently a serious warning sign that assets are growing more. quickly as income. The company’s cash-to-debt ratio of 1.16 ranks the company below 59.42% of the semiconductor industry.

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Klarman is joined by Primecap Management,

Li Lu (professions, portfolio),

Ruane Cunniff (Trades, Portefeuille), Pioneer Investments and

David tepper (Trades, Portfolio) as the main gurus shareholders of Micron (UM, Financial).

Veritiv

A position in Veritiv Corp. (VRTV, Financial) also recorded exceptional performance in the Klarman portfolio. The position was first established in the third quarter of 2014 and has increased by approximately 1.6 million shares to date. Since its inception, Klarman has only made three equity cuts and has made regular additions as stock prices fluctuate. Its average purchase price is $ 38.82 per share and the stake stands at an estimated total gain of 114.69%.

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Veritiv provides printing, editing, packaging and installation solutions. The company also provides logistics and supply chain management services. It operates in four main segments depending on the type of product. The printing segment, which generates the majority of revenue, distributes commercial printing and specialty paper products. The Publishing segment sells coated and uncoated commercial printing papers to publishers and retailers for use in magazines, books and direct mail. The packaging segment sells a variety of paper-based packaging products in the fiber-based, flexible and rigid categories. The Facility Solutions segment sells cleaning, break room, bathroom, safety and hazard supplies. The majority of income comes from the United States.

The stock was trading at $ 86.85 per share with a market cap of $ 1.30 billion on September 16. The stock is significantly overvalued, as the GF value line shows.

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GuruFocus gives the company a financial strength rating of 5 out of 10 and a profitability rank of 5 out of 10. There are currently two serious warning signs for declining revenue per share and declining profit margin. ‘exploitation. As per the warning sign, the company’s revenue has declined every year since 2018 and the bottom line returned to green in 2020 for the first time since 2016.

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Klarman is by far the largest shareholder guru with 23.89% of the shares outstanding. Other Veritiv Guru Shareholders (VRTV, financial) include the firm Simons,

Jeremy grantham (trades, portfolio) and

Paul Tudor Jones (trades, portfolio).

Metals Trilogy

Klarman’s second highest grossing investment is Trilogy Metals Inc. (TMQ, Financial). The holding company was created in the third quarter of 2016 with the purchase of 10.60 million shares. The operation saw several additions as stock prices surpassed $ 2. Klarman bought shares at an average price of 81 cents and sold shares at an average price of $ 2.03. In total, he gained an estimated total of 140.69% on the holding.

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Trilogy Metals is an exploration stage company engaged in mineral exploration. The company is focused on the exploration and development of its mineral resource properties, which include the Upper Kobuk mining projects (UKMP or UKMP Projects) in the Ambler mining district in Alaska.

On September 16, the stock was trading at $ 1.95 per share with a market cap of $ 279.20 million. According to the Peter Lynch chart, the stock was trading below its intrinsic value at the end of 2020.

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GuruFocus gives the company a financial strength rating of 7 out of 10 and a profitability rating of 2 out of 10. Serious warning sign is issued for low Piotroski F-Score, implying poor business operations. The company’s cash flow has been negative for the past decade.

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Alongside Klarman,

Jean Paulson (Trades, Portfolio) and the Simons firm also maintain positions in Trilogy Metals (TMQ, Financial).

Translate the biography

Klarman’s Translate Bio Inc. (TBIO, Financial) is firmly at the top of its most profitable holdings. The holding company was first established in the second quarter of 2018 with the purchase of 1.92 million shares. Klarman has made several significant additions to the stake in recent years to bring it to a total of 18.04 million shares. At an average purchase price of $ 10.59 per share, the stake quickly grew to an estimated total gain of 252.78%.

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Translate Bio is a clinical-stage mRNA therapy company developing a new class of potentially transformative drugs to treat diseases caused by protein or gene dysfunction. The company is developing MRT5005 for the treatment of cystic fibrosis (CF) and MRT5201 for the treatment of ornithine transcarbamylase (OTC) deficiency.

As of September 16, the stock was trading at $ 37.36 per share with a market cap of $ 2.82 billion. According to the Peter Lynch chart, the stock was trading above its intrinsic value as of June 28.

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GuruFocus gives the company a financial strength rating of 5 out of 10 and a profitability rating of 1 out of 10. There is currently a severe warning sign issued for a Beneish M-Score which indicates that the company may manipulate its finances. Negative returns on invested capital over the past five years indicate that the company has struggled with capital efficiency.

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Simons and

Joel greenblatt (Trades, Portfolio) also hold stakes in Translate Bio (TBIO, Financial).

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