Klarman’s Baupost Posts 4% Return in First-Half Rebound

  • Hedge fund rose 1.25% in June in tough value investing period
  • Public assets at the $28 billion firm fell about 6.7% in 2015

Seth Klarman is making money again after experiencing the third losing year in his history.

Klarman’s $28 billion hedge fund rose about 1.25 percent in June, bringing its gain this year to about 4 percent, according to a person with knowledge of the firm who declined to be named. Baupost, whose multiple partnerships have varying returns, has seen some energy bets rebound after they dragged on performance in 2015.

Baupost has turned around performance in a tough climate for value investors, who have struggled to find bargains after monetary policy inflated stock prices. Grantham Mayo Van Otterloo & Co., known for the bearish views of founder Jeremy Grantham, recently cut about 10 percent of its 650-person staff following a sharp decline in assets. Bill Ackman’s publicly traded Pershing Square Holdings Ltd. fell 23 percent this year as of July 5.

Baupost has sought to take advantage of depressed oil prices by boosting stakes in energy companies. Cheniere Energy Inc. and Antero Resources, among the firm’s largest losers last year, contributed to a decline of about 6.7 percent in the partnership’s public assets in 2015, according to a Jan. 20 letter to investors.

Commodity Prices

With the energy sector considered “so toxic to investors that almost no one wants to get involved,” prices may be approaching a bottom, Klarman wrote at the time.

As commodity prices have bounced back in 2016, some of those stocks have gained. Antero climbed 19 percent through June, while Cheniere rose 0.8 percent. EMC Corp., Baupost’s largest U.S. public stock holding at the end of the second quarter and in the process of being bought by Dell Inc., rose 6.7 percent in the first half of the year.

Diana DeSocio, a spokeswoman for Baupost, declined to comment.

Klarman, 59, who wrote the preface to the sixth edition of “Security Analysis,” the landmark 1934 book by Benjamin Graham on value investing, has been a portfolio manager with Boston-based Baupost since its inception in 1982.

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