Seth Klarman (Trades, Portfolio), founder and leader of The Baupost Group, disclosed in a regulatory 13F filing that his firm’s top trades during the first quarter included new positions in Skyworks Solutions Inc. (SWKS, Financial) and Jazz Pharmaceuticals (JAZZ, Financial) and boosts to its holdings of Alphabet Inc. (GOOGL, Financial)(GOOG, Financial) and Fidelity National Information Services (FIS, Financial). The firm also exited its investments in Meta Platforms Inc. (META, Financial) and Micron Technology Inc. (MU, Financial).
The value investor received an economics degree at Cornell University and an MBA at Harvard University. Klarman also authored the book “Margin of Safety” and cautioned that investing is not only about producing absolute returns, but also focusing on the risks incurred to generate absolute returns.
The Boston-based firm invests in a wide array of securities, including value stocks, distressed debt, liquidations, foreign equities and bonds. As of March, the firm’s $5.82 billion 13F equity portfolio contains 30 stocks, with three new positions and a quarterly turnover ratio of 10%. The top four sectors in terms of weight are communication services, technology, industrials and consumer cyclical, which represent 48.28%, 27.91%, 7.72% and 4.62% of the equity portfolio.
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Skyworks Solutions
Baupost purchased 703,865 shares of Skyworks Solutions (SWKS, Financial), giving the position 1.43% equity portfolio weight. Shares averaged $110.81 during the first quarter; the stock is significantly undervalued based on its price-to-GF Value ratio of 0.59 as of Friday.
The Irvine, California-based semiconductor company has a GF Score of 95 out of 100 based on a momentum rank of 10 out of 10, a rank of 9 out of 10 for profitability and growth and a rank of 8 out of 10 for financial strength and GF Value.
Skyworks’ high profitability rank is driven by several positive investing signs, which include a three-star business predictability rank and an operating margin that outperforms approximately 90% of global competitors despite declining by approximately 3.4% per year on average over the past five years.
Other gurus with holdings in Skyworks Solutions include Jeremy Grantham (Trades, Portfolio)’s GMO, Joel Greenblatt (Trades, Portfolio)’s Gotham Asset Management and Bridgewater Associates.
Jazz Pharmaceuticals
The firm invested in 478,696 shares of Jazz Pharmaceuticals (JAZZ, Financial), giving the position 1.20% equity portfolio weight. Shares averaged $147.92 during the first quarter; the stock is modestly undervalued based on its price-to-GF Value ratio of 0.81 as of Friday.
The Irish pharmaceutical company has a GF Score of 83 out of 100 based on a GF Value rank of 9 out of 10, a profitability rank of 8 out of 10, a growth rank of 7 out of 10, a momentum rank of 5 out of 10 and a financial strength rank of 4 out of 10.
Jazz Pharmaceuticals’ operating margin outperforms approximately 85% of global competitors despite declining by approximately 25% per year on average over the past five years.
Alphabet
Baupost purchased 1,857,500 Class C shares of Alphabet (GOOG, Financial), boosting the position by 46.50% and its equity portfolio by 3.32%.
The transaction boosted Alphabet into the firm’s second-largest holding with a portfolio weight of 10.46%.
Class C shares of Alphabet averaged $96.56 during the first quarter; the stock is modestly undervalued based on its price-to-GF Value ratio of 0.83 as of Friday.
The Mountain View, California-based online media giant has a GF Score of 99 out of 100 based on a rank of 10 out of 10 for profitability and growth, a financial strength rank of 9 out of 10, a momentum rank of 8 out of 10 and a GF Value rank of 7 out of 10.
Fidelity National Information Services
The firm added 2,686,549 shares of Fidelity National Information Services (FIS, Financial), expanding the position by 124.67% and its equity portfolio by 2.51%. Shares averaged $65.09 during the first quarter.
GuruFocus’ GF Value Line labeled the Jacksonville, Florida-based record-keeping and payment processing software company a possible value trap based on its low price-to-GF Value ratio of 0.43 as of Friday and low ranks for financial strength, momentum and growth.
Based on the company’s GF Score component ranks, which include a profitability rank of 6 out of 10 and a GF Value rank of 4 out of 10, GuruFocus assigned Fidelity National Information Services a GF Score of 63 out of 100.
Meta Platforms
Baupost sold all 1,727,851 shares of Meta Platforms (META, Financial), trimming 3.40% of its equity portfolio.
Shares of Meta averaged $170.30 during the first quarter; the stock is significantly undervalued based on its price-to-GF Value ratio of 0.64 as of Friday.
The Menlo Park, California-based social media giant has a GF Score of 96 out of 100 based on a growth rank of 10 out of 10, a profitability rank of 9 out of 10, a momentum rank of 6 out of 10 and a rank of 8 out of 10 for financial strength and GF Value.
Micron Technology
The firm sold all 3,285,974 shares of Micron Technology (MU, Financial), trimming 2.69% of its equity portfolio.
Shares of Micron Technology averaged $58.60 during the first quarter; the stock is significantly overvalued based on its price-to-GF Value ratio of 1.35 as of Friday.
The Boise, Idaho-based semiconductor chip company has a GF Score of 77 out of 100 based on a profitability rank of 8 out of 10, a GF Value rank of 1 out of 10 and a rank of 7 out of 10 for momentum, financial strength and growth.
