Investment funds are usually looking for cash, so it was something of a surprise (although not to ValueWalk readers) when Baupost Group LLC founder Seth Klarman announced that he was giving money back to his investors for the second time in just a few years. The problem is that, as a dedicated value investor, Klarman found himself holding onto cash and increasing exposure to gold because not much else looked attractive, according to several people who attended a recent speech given by Klarman.

Nearly half of Baupost’s AUM was cash

Before sending cash back to investors, Baupost nearly passed the $30 billion AUM mark this year, compared to just $27 million in 1982, and during that time Klarman has always made a point of focusing on long-term value creation. Sometimes that means holding onto cash so that he could seize opportunities as they arose.

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