A few months ago I helped put together a PDF of Seth Klarman’s letters to investors of the Baupost Fund from 1995 to 2001. Among many other great discussions, Klarman goes over a few of his individual holdings and Baupost’s rationale for investing.
One interesting aspect of Klarman’s investing style is his allocation into many asset classes. By not limiting himself to one asset class, he is able to hugely increase his universe of investments and also mitigate the risk of a single market class collapsing. If public equities are generally overvalued, corporate bonds, treasuries, private equity or real estate may provide better returns. It is also well known that Klarman doesn’t hesitate to hold a lot of cash when he can’t find any good investments.
In this post, I’d like to examine the investment allocations of the Baupost Fund from both a numerical and qualitative perspective. (Keep in mind that the letters from above are from only one of Baupost’s smaller funds, but my guess is that the allocations are very similar to those in the main fund.)
Let’s take a look at the investment categories: Continue reading “Baupost Fund Allocations: 1995-2001”