Baupost Group reported that its equity portfolio has a market value of around $5.09 billion for the fourth quarter based on its 13F filing with the Securities and Exchange Commission (SEC).

 

Seth Klarman is the president of Baupost Group. Klarman is a value investor and author of the book, Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor. His firms generated average returns of 20% annually.

Baupost new stockholdings

The filing shows that the hedge fund started a new position in Atara Biotherapeutics, Forward Pharma, and Paratek Pharmaceuticals. The three stocks belong to the top 20 largest stockholdings of the hedge fund in its equity portfolio.

Atara Biotherapetics

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Baupost acquired 2,495,913 shares of Atara Biotherapeutics, a clinical-stage biopharmaceutical company focused on developing treatments for debilitating diseases. The hedge fund’s stake in the company has a market value of approximately $59.13 million.

Atara Biopharmaceuticals recently priced its underwritten public offering of 3,638,333 shares for $18.00 per share on February 12. Goldman Sachs and Citigroup Global Markets serve as joint book-running managers while Jefferies serves as acting co-manager for the proposed offering. The company also gave a 30-day option for the underwriters to buy additional shares of up to 545,749 shares.

Over the past 52-weeks, the shares of Atara Biotherapeutics traded between $9.66 and $35.45 per share. The stock closed $18.00 per share on Friday. The company gained 69% over the past year.

Forward Pharma

During the quarter, Baupost bought 5,367,300 shares of Forward Pharma, a biopharmaceutical company focused on advancing the proprietary formulation of dimethyl fumarate for the treatment of multiple sclerosis and other immune disorders such as psoriasis. Baupost’s stake in the company is worth $111.8 million.

Forward Pharma received a notice from the United States Patent and Trademark Office (USPTO) regarding its patent application 13/143,498 covering its erosion matrix formulation of dimethyl fumarate (DMF). The agency issued patent number 8,906,420 for its application. The patent will expire on January 2030.  The company’s lead drug, FP187 is covered by the patent.

“This is further evidence of the progress we are making in our intellectual property estate. With patent protection extending into 2030 in the U.S., we believe that we have now established a long runway for our novel formulation of DMF, FP187,” said Peder Andersen, CEO of Forward Pharma.

The shares of Forward Pharma closed $23 per share on Friday. The stpck traded between $15.75 and $27.44 per share over the past 52-weeks. The company gained more than 29% over the past year.

Paratek Pharmaceuticals

Baupost purchased 1,735,218 shares of Paratek Pharmaceuticals, specialty pharmaceutical company focused on the development and commercialization of therapeutic products in the field of neuroscience. Its lead product candidate is omadacycline. It is a broad-spectrum intravenous and oral once daily antibiotic candidate for serious community-acquired infections.

Baupost’s stake in Paratek Pharmaceuticals is worth around $62.1 million, which represent 12% of the outstanding shares of the company.  The company recently adopted an equity incentive plan under NASDAQ Rule 5635(c)(4). The plan reserves 360,000 shares of its common stock subject to adjustment for stock dividends, stock splits, or other changes, solely for the grant of inducement stock options to new employees.

The shares of Paratek Pharmaceuticals closed $26.95 per share, up 2.47% on Friday. Over the past 52-weeks, the stock traded between $16 and $45.96 per share. The company gained 716% over the past year.

New investment in oil & gas exploration

Baupost’s other new stockholding is Bellatrix Exploration, an oil &gas exploration and production company based in Canada. The hedge fund purchased 18,103,713 shares of Bellatrix Exploration. Its stake is worth approximately $65.89 million

The shares of Bellatrix Exploration surged more than 15% on February 11 after Baupost revealed in its 13G filing that it beneficially owned 11.38% stake in the company. The stock closed $3.46 per share, up 1.47% on Friday.

Over the past 52 weeks, the stock traded between $2.38 and $11.65 per share. The company lost more than 57% of its stock value over the past year.

He also boosted his stake in Cheniere Energy Inc.(LNG).

Sabrina Willmer of Bloomberg News has some additional information on Klarman’s energy investments based on Baupost’s Q4 letter to investors.

Seth Klarman told investors:

“Baupost wasted no time in redirecting additional investment team members into the energy area to sift through the carnage/”

But Klarman is having trouble finding bargains in other pockets of the market, stating:

“The broader market climbed relentlessly higher with no significant correction.”

“Bargains became increasingly scarce as the year progressed.”

13F Baupost Group
Baupost Group

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