Baupost’s Klarman picks up small-caps, trims a dozen plus losing SPACs
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Seth Klarman, Baupost’s chief investment officer, found some buying opportunities in small caps amid the volatile first quarter market. He also reduced his stakes at a dozen SPACs which have been particularly affected by rising rates. A recent 13F filed with the Securities and Exchange Commission shows that the value investor, a long-standing one, added approximately 1.3million shares to Gray Television, valued at $28.5 million as of March 31st. Atlanta-based TV broadcaster Gray Television has a $1.9 billion market cap and its shares are down about 3% each year. It outperforms the larger market. Klarman was often compared with Warren Buffett and also made small bets in breakfast cereal maker Post Holdings as well as its spinoff Bellring Brands. His stakes were worth $26.2million and $11.1million at the close of the quarter according to the filing. Market cap for both firms is below $5B. Post Holdings has gained nearly 8% in the past year. The Consumer Staples Select Sector SPDR Fund, however, is unchanged. Bellring has seen a 1% increase in stock value since March’s spinoff. As the market was struggling, the hedge fund manager dramatically reduced his exposures to SPACs. Klarman sold his $150 million Pershing Square Tontine Holdings position to Bill Ackman and decreased the SPAC warrants. The following 13 SPAC/SPAC warrants were also trimmed by Klarman in the first quarter. Advantage Solutions Altimeter Growth Corp. II WARRANT: Aurora Innovation Inc. Dragoneer Growth Opportunity Corp. II Grab Holdings Joby Aviation WARRANT : Joby Aviation Liberty Media Acq. Co. WARRANT: Pershing Square Tontine Holdings WARRANT Redball Acq. Corp. SVF Investment Corp. SVF Investment Corp. WARRANT: Vertical Aerospace Ltd. SPACs — often speculative stocks with no or little earnings — have been crushed this year in the face of rising rates as well as elevated market volatility. CNBC SPAC Post Deal Index is a proprietary index that tracks SPACs which have finished their mergers, and made their target companies public. It has fallen more than 40% since then. Half of Klarman’s largest holdings at March’s end were tech companies, such as ViaSat, Qorvo, Fiserv, Fiserv, and Intel. Klarman’s Alphabet stake increased by 7%, to $678 million as of the end March. His position in Fiserv was also substantially increased. In the first quarter of this year, the investor liked Dropbox and increased his stake by 30% to $246 million. Klarman wrote earlier in the year to investors, stating that inflation was a danger and that he is taking precautions against large price rises.
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