Klarman’s Baupost Cuts Its Holdings in Hewlett-Packard

Baupost Group LLC, the Boston-based hedge fund run by Seth Klarman, sold almost half of its shares in Hewlett-Packard Co. (HPQ) in the third quarter as the technology firm stumbled.

Baupost sold 12.47 million of Palo Alto-based Hewlett- Packard, cutting its holdings to 14.38 million shares, according to a filing today with the U.S. Securities and Exchange Commission. Baupost also sold 5.6 million shares of Microsoft Corp. (MSFT), bringing its stake in the software company to 1.4 million shares, the firm said.

Hewlett-Packard cut its forecast for full-year profit in August, underscoring the challenge facing Chief Executive Officer Meg Whitman. In October, Whitman projected 2013 profit that missed analysts’ estimates and told analysts a turnaround at the computer maker wouldn’t happen any time soon. Hewlett- Packard lost 49 percent this year, making it the fourth-worst performing stock in the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

Baupost bought Hewlett-Packard in the third quarter of 2011, according to data compiled by Bloomberg.

Hewlett-Packard and Redmond, Washington-based Microsoft have lost ground as competition from tablets have squeezed sales. Microsoft, the largest software maker, reported fiscal first-quarter revenue and profit in October that missed estimates on declining sales of Windows. Its shares have gained 4.4 percent this year.

Klarman is a bargain hunter who wrote the preface to the sixth edition of “Security Analysis,” a 1934 book by Benjamin Graham and David Dodd that is considered the bible of value investing.

Money managers who oversee more than $100 million in equities must file a Form 13F within 45 days of each quarter’s end to list their U.S.-traded stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.

To contact the reporter on this story: Charles Stein in Boston at cstein4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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