Monday was the deadline for investment managers to publicly disclose their end-of-second-quarter holdings. Financial reporters typically report on the changes in the portfolios of a small group of well-known investors, completely overlooking one of the greatest investors of the last 30 years because of his low public profile (he is followed by a small number of bloggers).
19% annualized over 27 years!
Seth Klarman founded the Baupost Group in 1982. In his oldest fund, Klarman compounded money at an annualized average rate of 19% over the 27-year period through 2009 (the most recent reliable number I could find). That's an extraordinary record, and Klarman achieved it with no leverage and while frequently maintaining substantial cash positions.
Finding value in 2 large-cap names
So what did Klarman do in the second quarter? Baupost's most significant action was establishing sizeable positions in two well-known names: Microsoft
He's pretty good on the macro picture, too
As a bottom-up fundamental investor, Klarman focuses on individual stocks. Nevertheless, the credit crisis and its aftermath have forced value investors to pay more attention to macroeconomic factors. On that front, Klarman is proving a quick study. During an interview in May 2010 (PDF link), he warned:
...we can be lulled into thinking all is well, that the United States will always be rated triple-A. Treasury Secretary Timothy Geithner speaks as if—at least in his public statements—he has been lulled into thinking that the United States will always be triple-A. That kind of thinking guarantees that someday the United States will no longer be triple-A.
Looking for more high-quality names? The Fool has identified 13 High-Yielding Stocks to Buy Today.
Fool contributor Alex Dumortier holds no position in any company mentioned. Click here to see his holdings and a short bio. You can follow him on Twitter. The Motley Fool owns shares of Microsoft. Motley Fool newsletter services have recommended buying shares of and creating a bull call spread position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.