- By Rupert Hargreaves
For those unfamiliar with this report, a 13F is a regulatory filing that provides information on an investment manager's equity holdings. Every U.S.-based hedge fund with more than $100 million of assets under management has to file one of these reports every quarter with the SEC detailing its equity holdings. The publication of these statements has become a notable event in the financial calendar as they provide a snapshot into the secretive hedge fund world.
These reports should only be used as a starting point for further research. They are a backwards-looking tool, and they don't explain why the manager acquired the holding, which means only reveal part of the story. What's more, 13Fs only detail equity holdings. They don't include cash, credit and other asset allocations. Still, these quarterly filings can throw up some interesting ideas.
Baupost's equity holdings
Baupost's 13F shows us that Klarman and his team made several portfolio changes during the three months to the end of December.
The most significant change was a large acquisition of Intel shares (NASDAQ:INTC). Baupost acquired $900 million worth of shares in the semiconductor giant in the last quarter of 2020, giving the position an 8% weight in the equity portfolio.
Klarman hasn't revealed why he decided to build a position in Intel, but it could be something to do with the company's new CEO and/or the fact that activist Daniel Loeb also recently built a stake in the business.
Klarman is a value investor at heart, but he also likes to invest in opportunities where there's a clear path to value realization. In this case, it may be the fact that he believed Loeb's actions would result in value realization at the business. The hedge fund manager had called for the firm to split up its business and change up its management team after losing $60 billion of market value in the space of a year.
As well as Intel, Klarman was also buying shares in Marathon Petroleum Corp. (NYSE:MPC) during the fourth quarter of last year. Baupost has acquired a $318 million position in the refiner, making it the 11th largest holding in the equity portfolio.
Those were the most significant purchases Klarman made in the fourth quarter of last year. He also added some to Baupost's position in Qorvo Inc. (NASDAQ:QRVO) investment, boosting the holding by 50% to 4.4 million shares or $740 million. After these deals, the holding is now Baupost's fourth-largest equity position, replacing media group Fox (NASDAQ:FOXA).
The holding in Fox was reduced by 17%. At this stage, it's not clear if this was just the start of a more extensive series of sales or just repositioning the portfolio to free up cash for other investments.
Interestingly, Baupost also reduced its holdings of Bill Ackman (Trades, Portfolio)'s Pershing Square Tontine Holdings Ltd (NYSE:PSTH). This was the fund's sixth-biggest position at the end of September, with a 4.3% weight in the equity portfolio. In the three months to the end of September, Klarman reduced his firm's interest in the Special Purpose Acquisition Company (SPAC) by nearly a third.
The hedge fund also reduced its extensive holdings of ViacomCBS Inc. (NASDAQ:VIAC) by 75%, taking the position down from a near 5% portfolio weight to 1.6%.
The largest equity holding in Baupost's portfolio at the end of 2020 remained eBay Inc. (NASDAQ:EBAY). This company has been a feature of the portfolio since the fourth quarter of 2018. Since then, Baupost has steadily increased its position, and today the holding is worth $1.6 billion, making it by far the largest holding in its equity portfolio with a near 15% weight.
Disclosure: The author owns no share mentioned.
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This article first appeared on GuruFocus.