Other than announcing his dislike for Ben Bernanke’s QEIII policy, Seth Klarman also shares the changes in Baupost Group’s management team in the latest investor letter. We broke the news yesterday that Herb Wagner, the co-portfolio manager at Baupost was leaving the firm to work on his own investment firm. Herb Wagner’s exit from Baupost Group will take place by the end of this year. We were the first media outlet to report the news. We stated on twitter, early yesterday:
Herb Wagner co-pm at #Baupost leaving to start his own firm (sources)
— ValueWalk.com (@valuewalk) October 23, 2012
Herb Wagner held the post of co-portfolio manager for over two years now, and had been with the firm for 13 years. Seth Klarman did not know about the intended plans of Herb Wagner until a few weeks ago. Wagner also headed the Public Investment Group of Baupost. Another development in the firm’s management will be the appointment of Jim Mooney as the head of the Public Investment Group by the start of 2013. Jim Mooney has been with the firm for more than 12 years. The letter clarifies that Mooney’s appointment as co-Head of the Public Investment Group was under review by Seth Klarman and Wagner for sometime now, and his promotion as co-Head was planned anyway, even if Herb Wagner did not plan on leaving. Jim Mooney also chairs the London branch of Baupost Group.
The investor letter does not detail the fund’s performance in the September quarter, but mentions that Baupost Group had positive returns for the third quarter and year to date in 2012. The letter notes that in the post-QEIII period, gold has gained a stronger footing and is leading the gains achieved by other equities. The housing market is gaining strength, but other fundamentals of economy are still weak. Seth Klarman predicts a slow earnings season for the corporate sector of the US, which has been eroded by inflation, risky environment, and low interest rates. He is also of the opinion that an episode of financial crisis is inevitable for every economy these days, and thinks that it is virtually impossible for the governments to prevent or control it, but the people can take safety measures and minimize the fallback. The approach is steady with Seth Klarman’s cautious and conservative style of investing, where he has held as much as 50 percent of his assets in cash, and is known for his cautious value approach to investing.