Seth Klarman

Seth Klarman: Why Diversification Is Bad For Investors

According to Baupost's third-quarter 13F, at the end of September, the hedge fund had around 19% of its equity portfolio invested in just one stock: 21st Century Fox (FOXA).

Q3 hedge fund letters, conference, scoops etc

Another 6.2% of the portfolio or just under $800 million is invested in Fox's B shares (FOXB) for a total investment value of around $3.2 billion, which works out as 25% of Klarman's equity portfolio in just one stock. (I should note at this point that 13Fs only include equity holdings and exclude bonds, private investments, and cash. Baupost's total assets under management in the region of $30 billion so this $3.2 billion is closer to just 11% of overall assets.)
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Many investors might consider this level of concentration to be excessive, but Seth Klarman, just like Warren Buffett is perfectly comfortable to have a more than 10% of his assets invested in only one security.


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