Seth Klarman
Encyclopedia
Seth Klarman is the founder and president of the Baupost Group
, a Boston
-based private investment partnership, and the author of a book on value investing
.
and Michael Price
of the Mutual Shares fund (now a part of Franklin Templeton Investments
). He founded the Baupost Group in 1982, which managed
USD 22 Billion as of 2010. Despite his unconventional strategies, he has consistently achieved high returns. He is a very conservative investor, and often holds a significant amounts of cash in his investment portfolios, sometimes in excess of 50% of the total. He often makes unusual investments, buying unpopular assets while they are undervalued, using complex derivatives
, and buying put option
s. Klarman typically keeps a low profile, rarely speaking in public or granting interviews. He has recently, however, spoken pessimistically about the stock market and warned of future inflation
.
In 1991, Klarman authored Margin of Safety, Risk Averse Investing Strategies for the Thoughtful Investor, which since has become a value investing classic. Now out of print, Margin of Safety has sold on Amazon for $1,200 and eBay for $2,000.
and Harvard Business School
. At Cornell, he was a member of the Delta Chi
fraternity, where he commonly studied while watching TV in the fraternity library/TV room. Despite this unorthodox study style, he achieved Phi Beta Kappa
.
Baupost Group
The Baupost Group, LLC, is a Boston hedge fund founded and run by Seth Klarman in 1982. Baupost Group's investment philosophy emphasizes risk management...
, a Boston
Boston
Boston is the capital of and largest city in Massachusetts, and is one of the oldest cities in the United States. The largest city in New England, Boston is regarded as the unofficial "Capital of New England" for its economic and cultural impact on the entire New England region. The city proper had...
-based private investment partnership, and the author of a book on value investing
Value investing
Value investing is an investment paradigm that derives from the ideas on investment and speculation that Ben Graham and David Dodd began teaching at Columbia Business School in 1928 and subsequently developed in their 1934 text Security Analysis...
.
Career
Before founding Baupost, Klarman worked for Max HeineMax Heine
Max L. Heine was a value investor and fund manager in New York.-Biography:A Jewish law student in Berlin, Max fled Nazi Germany in the late 1930s for New York, where he found work in a department store...
and Michael Price
Michael Price
Michael F. Price is a value investor and fund manager in Far Hills, New Jersey.-Career:He began his career in 1973 when he joined Max Heine at Mutual Series. In 1982, he became a full partner and when Heine died in 1988, became the president and chairman. In 1996, Mutual Series was merged into...
of the Mutual Shares fund (now a part of Franklin Templeton Investments
Franklin Templeton Investments
Franklin Resources Inc. is a holding company which, together with its subsidiaries, is referred to as Franklin Templeton Investments; it is an investment firm originally founded in New York in 1947 as Franklin Distributors, Inc. It is listed on the NYSE under the ticker BEN, in honor of Benjamin...
). He founded the Baupost Group in 1982, which managed
Assets under management
Assets under management is a financial term used denote the market value of funds being managed by a financial instutition on behalf of its clients, investors, depositors, etc. This metric is a sign of size and success against competition...
USD 22 Billion as of 2010. Despite his unconventional strategies, he has consistently achieved high returns. He is a very conservative investor, and often holds a significant amounts of cash in his investment portfolios, sometimes in excess of 50% of the total. He often makes unusual investments, buying unpopular assets while they are undervalued, using complex derivatives
Derivative (finance)
A derivative instrument is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties.Under U.S...
, and buying put option
Put option
A put or put option is a contract between two parties to exchange an asset, the underlying, at a specified price, the strike, by a predetermined date, the expiry or maturity...
s. Klarman typically keeps a low profile, rarely speaking in public or granting interviews. He has recently, however, spoken pessimistically about the stock market and warned of future inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
.
In 1991, Klarman authored Margin of Safety, Risk Averse Investing Strategies for the Thoughtful Investor, which since has become a value investing classic. Now out of print, Margin of Safety has sold on Amazon for $1,200 and eBay for $2,000.
Education
Klarman is a graduate of Cornell UniversityCornell University
Cornell University is an Ivy League university located in Ithaca, New York, United States. It is a private land-grant university, receiving annual funding from the State of New York for certain educational missions...
and Harvard Business School
Harvard Business School
Harvard Business School is the graduate business school of Harvard University in Boston, Massachusetts, United States and is widely recognized as one of the top business schools in the world. The school offers the world's largest full-time MBA program, doctoral programs, and many executive...
. At Cornell, he was a member of the Delta Chi
Delta Chi
Delta Chi or D-Chi is an international Greek letter college social fraternity formed on October 13, 1890,at Cornell University, initially as a professional fraternity for law students. On April 29, 1922, Delta Chi became a general membership social fraternity, eliminating the requirement for men...
fraternity, where he commonly studied while watching TV in the fraternity library/TV room. Despite this unorthodox study style, he achieved Phi Beta Kappa
Phi Beta Kappa Society
The Phi Beta Kappa Society is an academic honor society. Its mission is to "celebrate and advocate excellence in the liberal arts and sciences"; and induct "the most outstanding students of arts and sciences at America’s leading colleges and universities." Founded at The College of William and...
.
Further reading
- http://www.scribd.com/full/31684724?access_key=key-1t9ic2d10okn0n15p6yo Notes from Seth Klarman's discussion at the CFA Institute's 2010 Annual Conference - May 18, 2010
- Klarman, Seth (2007). Remarks at MIT (PDF). Website of Redfield, Blonsky & Co., LLCLimited liability companyA limited liability company is a flexible form of enterprise that blends elements of partnership and corporate structures. It is a legal form of company that provides limited liability to its owners in the vast majority of United States jurisdictions...
. Accessed 11-11-2008. - http://www.iimagazine.com/Article.aspx?ArticleID=1962261 Seth Klarman interview by Alpha
- http://www.designs.valueinvestorinsight.com/bonus/bonuscontent/docs/Klarman2005.pdf Excerpts from 2005 Baupost Group Letter
- http://www.bengrahaminvesting.ca/Teaching_Applications/Guest_Speakers/2009_speakers.htm#Seth_Klarman Seth Klarman video conference at Ben Graham Center for Value Investing
- http://www.oid.com/public/html/excerpts/Baupost2009/OIDBaupostInHouse.pdf Seth Klarman featured in Outstanding Investor's Digest March 2009
- http://video.google.com/videoplay?docid=3933071013675141897&ei=vZmMS4bCC8iblAe36vmiCQ&q=seth+klarman&hl=en# Seth Klarman guest lecture at Harvard's Psychology of Leadership course - May 1, 2006
External links
- "Manager Frets Over the Market, but Still Outdoes It," New York Times, May 13, 2007
- "How To Ride Seth Klarman's Coattails," Forbes, February 25, 2010
- "The Financial Life: Seth Klarman," Bloomberg Business Week, June 17, 2010