BAUPOST LETTERS PDF

We be- lieve this decline will be more than fully reversed in the future based on improved business perfor- mance. At the current level, the shares trade at a price approximately equal to net current assets; the company is involved in a number of projects that could very positively impact results in the second half of and beyond. Dep Corporation, while statistically cheap, did not perform in accordance with our expectations. The company overpaid for an acquisition and their debt load from the acqui- sition left little operating flexibility. Other leading declines, such as TLC Beatrice and Semi Tech Global, reflect temporary market fluctuations that have resulted in these undervalued situations becoming even more undervalued. We believe that both these situations have great upside potential with little downside risk.

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As always, he seems to have a cautious stance. Below are further excerpts from the letter that are more investment-focused. We will not complain about this; indeed, we see it as an opportunity. These are levels that traditionally occur closer to market bottoms than tops.

The recent selloff likely presented a buying opportunity — you can go years without seeing such valuations — but not across the board and not one for the faint of heart. The Baupost founder also expressed another area of concern: "Moreover, we have been increasingly worried that the U.

As with a margin call, those pressures can include an intensely short- term orientation, extreme loss resistance, and an inability to stand apart from a panicky crowd. And this complacency can then violently swing the other direction once volatility picks up as the market showed in its recent sell-off. This could cause a sharp impact on small cap companies. Klarman then finishes up by touching on balancing risk-taking with risk aversion. Catalytic events shift the outcome of investments from a reliance on future market multiples and macroeconomic developments which are not at all under your control to a dependence on your assessment of the outcomes, probabilities, and implications of announced or anticipated corporate events, including mergers and acquisitions, bond maturities, debt restructurings, bankruptcies, major corporate asset sales, spinoffs, and tender offers.

No strategy can avoid all risk of loss. But we believe our approach should increase the likelihood of achieving sustainable gains with limited downside risk over the long- run. To put it differently, a portfolio of near infinite duration such as an all equity portfolio without catalysts can trade just about anywhere.

With such exposures, if stock prices plummet, the odds go up that an investor will feel pressure to do the wrong thing and sell into market weakness. A limited duration portfolio, both because of the hopefully truncated downside in a bad market as well as the beneficial cash inflows buying power that catalysts usually generate, is hugely advantageous in navigating through turmoil. That said, he is certainly concerned about growing global uncertainty, rising division in America, as well as rising global debt.

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Baupost Group

Our Readers know that we generally provide excerpts along with commentary for each topic. However, at the request of Baupost, we will not be providing any excerpts, only our interpretive summaries, for this series. This category is generally uncorrelated with markets. Therefore this category is generally correlated with markets. Perhaps Klarman drew inspiration from the classic Buffett letters.

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BAUPOST LETTERS PDF

As always, he seems to have a cautious stance. Below are further excerpts from the letter that are more investment-focused. We will not complain about this; indeed, we see it as an opportunity. These are levels that traditionally occur closer to market bottoms than tops.

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Seth Klarman Baupost Group Letters

Takinos Indeed, Klarman has made multiple references to the short-term nature of the fund management industry, how many investment managers have become fixated on short-term performance, increasing levels of speculation as they rush to catch market letterx. Let us know in the comments section! To find out more, including how to control cookies, see here: Moreover, the price recovery from a bottom can be very swift. We strongly believe that this mentality leads to pursuit of relative rather than absolute investment returns, a direction we certainly want to avoid…A smaller pool of funds seeking to avoid meaningful declines in market value at every point in time and seeking more aggressive return objectives cannot afford to be fully invested in the absence of attractive opportunities. Subscribe to ValueWalk Newsletter.

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