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Klarman’s Baupost Sold Hewlett-Packard, Microsoft

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Feb. 13 (Bloomberg) -- Baupost Group LLC, the Boston-based hedge fund run by Seth Klarman, sold its remaining stakes in Hewlett-Packard Co. and Microsoft Corp. in the fourth quarter, abandoning bets on two firms tied to the personal-computer business.

Baupost sold 14.4 million shares of Palo Alto, California-based Hewlett-Packard and 1.4 million shares of Redmond, Washington-based Microsoft, according to a regulatory filing today with the U.S. Securities and Exchange Commission. The firm bought 7 million shares of New York-based American International Group Inc., the insurer that repaid a U.S. bailout last year.

Klarman, known for his emphasis on undervalued securities, invested in Hewlett Packard and Microsoft in 2011. He started selling shares in both companies in the third quarter of 2012, according to regulatory filings, and completely exited his positions by year-end.

The personal computer industry is facing its second straight decline in annual sales this year while tablets and smartphones continue to surge. PC shipments fell 4 percent in 2012 and will slide a further 1.5 percent this year, JPMorgan Chase & Co. analysts estimate.

Microsoft shares rose 2.9 percent in 2012 while Hewlett-Packard dropped 45 percent, according to data compiled by Bloomberg.

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.

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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