Dear Baupost Fund Shareholder,. We are pleased to report a gain . of all dividends. m arketfolly. Click here to read more hedge fund letters at MarketFolly. com. Seth Klarman Shareholder Letter March 4, at am by. I found some great excerpt from Seth Klarman’s Annual Letter (H/T to. During the financial crisis, Seth Klarman’s funds lost somewhere between 7% and . Letters – · My Favorite Quote from Baupost’s Annual Letter.

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Seth Klarman Shareholder Letter 2010

Whether or not this view is correct is up for debate. Such diversions usually end badly, leaving these competitors wounded and mostly on the sidelines when the distressed opportunity set once again becomes compelling. I want to have the liquidity to get very aggressive when the cover of the New Yorker looks like this: Newer Post Older Post Home. But despite their invaluable teachings, Klarman actually believes that their work is now somewhat out-of-date:. However, the developments in technology over the past 80 or so years since Benjamin Graham started teaching at the Columbia Business Baipost, have seriously changed the way equity and debt markets operate.

Let’s say you have a hold period of 2 years. A country of security analysts would still overreact. When the market started to fall, Klarman profited. If you’re unfamiliar with Baupost shame on youhere’s a brief description extracted from their December letter: Why, if distressed debt is such an attractive arena, didn’t many more funds sprout up to take advantage of the excess returns there?

Covenant Analyst Capital Structure Arbitrage: Doesn’t a lower bond price mean a worse credit? Klarman is a traditional value investor, looking for companies, bonds, credit instruments and real estate opportunities that all trade below what he, and his analysts believe is intrinsic value.

Seth Klarman of Baupost Group is largely regarded as one of the best investors of all time. In discussing Graham and Dodd: Is there a function on Bloomberg or another website that has that information?


Rule Capital Structure Arbitrage: Historically, little volume transacts at the bottom or on the way back up, and competition from other buyers will be much greater when the markets settle down and the economy begins to recover.

On the flip side, a big win would be a pull to par and possible more depending if you get cheap equity i.

First is Seth Klarman of the Baupost Group, who you will hear from later in the course. Could you recommend funds which offer letters like the big HW’s at Oaktree? We respect your privacy no spam ever.

How would you handle the following situation? Value, which is determined by cash flows and assets, is not. Does anyone know what this part means? Are you evaluating them on execution based differences or something more along the lines of a competitive advantage, like going direct to the consumer Progressive? If you haven’t been in that spot before, you probably can’t understand the feeling. If you do not have a sound process, you can freeze, or worse, get short, just went the opportunity set is at its ripest.

While it is always tempting to try to time the market and wait for the bottom to be reached as if it would be obvious when it arrivedsuch a strategy has proven over the years to be deeply flawed. Under no circumstances is this an offer to sell or a solicitation to buy securities discussed on this site.

Distressed Debt Investing: My Favorite Quote from Baupost’s Annual Letter

Some of the longer tail insurers can look good according to all of the standard metrics, but when you look at them and suspect something with reserves, it can all get thrown out the window. How do you determine how much dry powder to keep at a given moment? They are unable to sit on their hands, fearing that their businesses would 22011 and their people would depart.

It has little in common with a portfolio of high-flying glamour stocks …It is to our advantage to have securities do nothing price wise for months, or perhaps years, why we are buying them.


But still, valuable and rare commentary from the legendary investor. Readers know in the past we have covered Seth Klarman’s letter to investors numerous times here is one such post: I’m interested if that number is a function of your hurdle rate and position size rules, intuition, or whatever. In his most recent letter to investors, Third Avenue Management’s Marty Whitman discusses this topic at length. Absolutely not – remember price does not determine whether a company is good or bad.

Seth Klarman Resource Page

Some of this is a function of selling some winners earlier in the month. If it falls in half, do you reinvest dividends? Further, if you had to look at a the hedge fund’s universe of analysis of financials: Also, do you dig into the level of looking at how their reserves trend and comparing it to competitors?

Byron Wien’s Market Commentary: About Me I have spent the majority of my career as a value investor. Sign Up for a Free Trial Now. Disclaimer This website is about distressed debt investing. Moreover, the price recovery from a bottom can be very swift. We will look at current distressed debt situations, try to explain the ins and outs of how decisions are made in the distressed debt world, probably rant a few times about positions that are working against me, and hopefully enlighten some readers.

Posted by market folly at 7: But those that practice it will often be rewarded when everyone else is running for cover. People would still find it tempting to day trade and perform technical analysis on stocks. A follow-up question was asked: