The latest batch of 13F filings have come out. I always enjoy looking through them to see what some of the best investors have been up to. The ability to copycat ideas from other intelligent and proven investors is a valuable and unique attribute of investing. I suspect we would all jump at the opportunity to be able to copycat Michael Jordan's jump shot or Tiger Woods' putting stroke during their prime.
One of my favorite 13Fs is that of the Baupost Group, the investment partnership run by Seth Klarman. Klarman, who gets very little press coverage, has one of the finest track records in the space -- approximately 19% per year for a span stretching nearly 30 years. Such a track record deserves close observation.
Baupost was quite active, relative to previous quarters, in the third quarter. The fund has a new small position in Office Depot (ODP) , which is interesting considering the difficulty the office retailing space is facing. But Baupost loves unloved, complex, or misunderstood situations.
Perhaps the most interesting additions were a collection of SPACs, or special purpose acquisition companies. SPACs are basically shell companies that are set up to acquire a business within a set period of time or else the funds are returned back to shareholders. Baupost has acquired stakes in Conyers Park Acquisition Corp (CPAA) and Saban Capital Acquisition Corp SCACU.
Financial stocks also have reappeared in the portfolio, with unconventional names like Northstar Asset Management (NSAM) and Synchrony Financial (SYF) . In Synchrony, Baupost has made it a sizable position at $500 million.
Cheniere Energy (LNG) still remains the fund's largest holding. Cheniere is a complicated business for analysts to understand today, and that's probably why Baupost loves it. To oversimplify, Cheniere is becoming a major exporter of liquefied natural gas to entities all over the world. The company has invested tens of billions of dollars on infrastructure that gives it a huge first-mover advantage. In the coming years, the distribution contracts that Cheniere has already signed will turn into toll booth- like contracts that should illustrate the company's huge cash flow generating abilities.
With the current uncertainty in the markets, Baupost's ideas are a great refuge for investors. They should dig through them with individual due diligence.