It is almost end of September now, and the third quarter is coming to a close, and there is still no sign of Seth Klarman’s Q2 letter (although it was released to shareholders, see correction below). Since nobody has seen the highly coveted investor letter from Seth Klarman, it appears we will have to settle with rehashing news from his Q1 letter multiple times to fill the void. Stephen Taub of II Alpha noted a few months back that Baupost may return capital at the end of this year and later confirmed from sources that Baupost was indeed returning capital at the end of 2013. Now two weeks later, Reuters’ Svea Herbst-Bayliss has confirmed the same news separately. Baupost is returning an undisclosed amount to its investors, period.
Klarman found nothing exciting to invest
In an investor letter released at the end of April this year which detailed the hedge fund’s performance in Q1, Klarman noted the increase in firm’s assets from Lehman liquidations and also said that it plans to return capital to clients by the year’s end if there are no new investment opportunities. It appears Klarman found nothing exciting to invest in after all.
“Unless the opportunity set increases dramatically later this year, we anticipate making a partial return of capital to clients at the year-end of 2013 to better match our assets under management to the opportunity set we see for new investments. More information and greater specificity will be provided in the fall”.
Klarman’s intense dislike for benchmarking
Seth Klarman, who manages $28 billion in his hedge fund, is an outspoken critic of the Fed and Bernanke. The highly private hedge fund does not release investment returns. In fact given Klarman’s intense dislike for benchmarking, relative performance comparison and short-term calculation of gains, we doubt they count it at all. Another famous hedge fund manager, Paul Singer, has expressed how much he hates having his investment returns compared to others, in his Q2 letter, Singer said,
“The last thing we want to hear when we hit a soft-patch (and the least helpful when we are trying to dig our way out) is a question about our performance relative to someone else’s.”
However Elliott does release investment returns, Elliott Associates was up 0.9 percent in August and has gained 7.3 percent YTD.
But back to the real issue, has anyone seen anything from Baupost since this speech?
Correction: September 24, 2013
An earlier version of this article incorrectly stated that Baupost did not release its second quarter letter to investors. The second quarter letter was infact released several months ago.