Klarman himself has written one of the most coveted books on value investing, Margin of Safety. The book is out of print,is one of the most stolen books from libraries, and sells for thousands of dollars online.
Seth Klarman is virtually unknown outside value circles, despite his impressive record and value of assets under
management. On average, Klarman’s hedge fund, Baupost has returned 19% p.a. despite holding a large portion of its assets in cash. During the financial crisis, Seth Klarman’s funds lost somewhere between 7% and 13%, certainly outperforming the majority of its hedge fund peer group.
Klarman is a traditional value investor, looking for companies, bonds, credit instruments and real estate opportunities that all trade below what he, and his analysts believe is intrinsic value. However, a margin of safety must be incorporated. Seth Klarman it seems will never chase a stock just because it’s the stock of the moment.
According to a lecture given by Bruce Greenwald: “Warren Buffett says that when he retires, there are three people he would like to manage his money. First is Seth Klarman of the Baupost Group, who you will hear from later in the course. Next is Greg Alexander. The third is Li Lu.”
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For more on Seth Klarman, head over to ValueWalk’s Seth Klarman Resource Page, where you can find a detailed rundown of his background, bio, and investment philosophy.
Seth Klarman: Authored books
Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor by Seth A. Klarman
Security Analysis: Sixth Edition, Foreword by Warren Buffett, Commentary by Seth A. Klarman
Seth Klarman: Recommended books
The Intelligent Investor
Benjamin Graham. No description needed here really.
You Can Be A Stock Market Genius
Joel Greenblatt. Greenblatt’s book examines catalyst-based investing such as spin-offs, mergers, risk arbitrage, etc. to exploit market inefficiencies.
The Aggressive Conservative Investor.
Martin Whitman. A great guide for learning how to analyze and evaluate stocks.
Anything by Jim Grant:
- Bernard M. Baruch: The Adventures of a Wall Street Legend
- Money of the Mind
- Mr. Market Miscalculates: The Bubble Years and Beyond.
- The Forgotten Depression: 1921: The Crash That Cured Itself
- The Trouble With Prosperity: A Contrarian’s Tale of Boom, Bust, and Speculation
- Mr. Speaker!: The Life and Times of Thomas B. Reed The Man Who Broke the Filibuster
- Minding Mr. Market: Ten Years on Wall Street With Grant’s Interest Rate Observer
- John Adams: Party of One
Anything by Roger Lowenstein:
- Buffett: The Making of an American Capitalist
- When Genius Failed: The Rise and Fall of Long-Term Capital Management. This bestseller is the tale of the collapse of Long Term Capital Management (LTCM) in 1998. The Hedge fund management team consisted of some of the greatest minds of our time.
- The End of Wall Street
- America’s Bank: The Epic Struggle to Create the Federal Reserve
- While America Aged An excellent book about the big, and increasing problems of unfunded pension funds in private companies, and the public sector.
- Origins of the Crash: The Great Bubble and Its Undoing Lowenstein’s tale of the tech bubble, and the collapse of Enron, and Worldcom.
Moneyball: The Art of Winning an Unfair Game
Michael Lewis’ classic. Another Michael Lewis book, The Big Short has also been recommended.
Too Big to Fail
Andrew Ross Sorkin’s book about the financial crisis.
