October 24, 2020 0 By admin

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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Could you elaborate on the statement “I also think the insurance industry is one of the most misunderstood industries out there. The corollary to an institutional investor reaching down for yield in Klarman’s quote above for an individual investor annaul buying a marginally cheap, marginally out of favor annuak cap. I also “riding the tide” as it were as many funds cannot invest in small bankrupt companies they can’t get any substantial size to move the needle and many people shrug these investments off.

For the past 8 years, I have worked on the buy side as a distressed debt and high yield investor. In my opinion, it is better to wait until market sentiment letfer “blood in the street” to purchase anything.

Seth Klarman Resource Page

That is somewhat a special circumstance. Let’s take a distressed bond trading at Follow Us On Twitter Tweets by marketfolly.

The claims agent websites capture the big cases but how do you find the small cases? 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.


This philosophy is implemented with a bottom-up value investment strategy whereby we hold only those securities that are significantly undervalued, and hold cash when we cannot find better alternatives. Therefore, patterns or performance cannot be modelled with any kind of accuracy, or predictability. Why, if distressed debt is such an attractive arena, didn’t many more funds sprout up to take advantage of the excess returns there?

How do you determine how much dry powder to keep at a given moment? If it falls in half, do you reinvest dividends?

Seth Klarman Shareholder Letter 2010

In a bull market, anyone…can do well, often better than value investors. Seth Klarman is virtually unknown outside value circles, despite his impressive record and value of assets under management.

Again the worst case is a total loss, but this is only 50 points. A follow-up question was asked: Can you explain annyal

Seth Klarman Shareholder Letter

This points up the need to measure our results over an adequate period of time. But a second order effect that many people miss is alluded to in the Klarman quote above which I’ll repeat again: Sixth EditionSeth Klarman notes how the coverage of financial markets on dedicated news networks, ferments the view that investors should have a view on everything the market is doing, and that they should be aware of every market movement.

Value, which is determined by cash flows and assets, is not. According to a lecture given by Bruce Greenwald: In this environment, the chaos is so extreme, the panic selling so urgent, that there is almost no possibility that sellers are acting on superior information.


A country of security analysts would still overreact. About Me I have spent the majority of my career as a value investor. Wisdom from Seth Klarman.

The fact of the matter is that buying a well followed, well covered large cap stock as an individual investor that may look cheap in an overbought market could produce good relative returns i.

Use this information at your own risk.

Seth Klarman Resource Page

Let’s say you have a hold period of 2 years. If you’re looking for more recent market commentary from the value investor, we also posted up excerpts from Klarman’s letter. However, the developments in technology over the past 80 or so years since Benjamin Graham started teaching at the Columbia Business School, have seriously changed the way equity and debt markets operate.

Whether or not this bauupost is correct is up for debate.

For simplicity less say best case is a par recovery: 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.

In discussing Graham and Dodd: For the financial year ending October 27Baupost posted a return of