Seth Klarman’s Baupost Group initiated a huge new stake in Intel Corp. in the fourth quarter.
The hedge fund firm bought more than 18 million shares valued at over $900 million, immediately making the computer-chip maker the firm’s third-largest long position in U.S. listed common stock, according to Baupost’s fourth quarter 13F filing on Friday.
It is unclear when Baupost built the position.
On December 29, Dan Loeb’s Third Point disclosed it held a significant stake in Intel. In a letter to Intel’s chairman, Loeb urged the company “to evaluate strategic alternatives, including whether Intel should remain an integrated device manufacturer and the potential divestment of certain failed acquisitions.”
The semiconductor company subsequently announced that it would bring back veteran Intel engineer and manager Pat Gelsinger to serve as chief executive officer.
Shares of Intel were up 24 percent for the year as of Friday.
Baupost also boosted its stake in another semiconductor company, Qorvo, by nearly 50 percent during the fourth quarter, making it the firm’s fourth-largest U.S. common stock long position.
Altogether, Baupost increased the value of its U.S. stock portfolio by about 17 percent to $10.8 billion at the end of the quarter. This is also 35 percent larger than the portfolio was valued at the end of the second quarter.
In November, Baupost said in a press release it managed roughly $29 billion.
At the time, the firm also disclosed that about 30 percent of its assets was held in cash or cash equivalents. This is actually toward the low end of its historic range.
Last year, Baupost posted a 4.7 percent gain, according to BusinessInsider, easily lagging the global equity markets.
This was the seventh consecutive year Baupost failed to deliver double-digit gains.
In 2019, the firm posted high single-digit returns, according to Klarman’s year-end letter to investors. Baupost finished the previous year roughly flat to down less than 1 percent, according to its 2018 letter.
At the end of 2017, Baupost voluntarily returned 6 percent of its capital to investors, most of whom are deemed to be long-term, blue-chip investors.
Institutional Investor reported last March that for the first time in nearly a decade, Baupost told existing investors they could add to their positions and was weighing the addition of new clients.
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Baupost is a value-oriented firm that seeks out undervalued investments with catalysts that can help them realize full value, favoring what it deems to be ignored assets — or very complex ones — mostly in distressed debt, commercial real estate, mortgages, and equities.
Klarman repeatedly tells investors that to outperform over time, managers must find edges that enable them to earn excess returns.
“We differ from others funds as a result of our steadfastly long-term, risk-averse orientation, very limited exposure to short selling, involvement in both public and private markets, [and] willingness to hold cash in the absence of immediate opportunity,” Klarman told clients in a 2017 letter.
In the fourth quarter, Baupost also took a smaller new position in Marathon Petroleum Corp.
At the same time it liquidated stakes in industrial distributor HD Supply Holdings and computer giant HP Inc.
Baupost also slashed its stake in media giant ViacomCBS — its fifth largest long in the third quarter — by 75 percent — and reduced its position in another media giant, Fox Corp. The hedge fund firm also cut its stake in Pershing Square Tontine Holdings, the blank check company sponsored in part by Bill Ackman’s Pershing Square Capital Management.
Back in November, Baupost acquired a majority stake in Timex Group, the watch making giant , according to a joint announcement between the company and Tom Blumenthal, partner and head of private corporate investments at The Baupost Group.
Baupost did not respond to a request seeking comment.
