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4 Stocks Seth Klarman Is Buying in 2010

BALTIMORE ( Stockpickr) -- For decades now, investors have increased their focus on following the smart money, reading books and letters penned by everyone from hedge fund managers to corporate CEOs. But how much would you pay to get inside the head of one money manager?

In the case of Baupost Group's value investing guru, Seth Klarman, investors are paying up serious cash to get a glimpse of a winning investment methodology.

In 1982, Klarman founded Baupost Group, a private investment partnership seeded by $27 million from wealthy Boston families. Today, Baupost manages funds in excess of $1.6 billion thanks to a phenomenal track record. But while Baupost is closed to new investors, Wall Street's clamoring over the opportunity to glean insight from Klarman's 1991 book, Margin of Safety, Risk Averse Investing Strategies for the Thoughtful Investor.

The book, which details the hedge fund manager's approach to value plays, was never reprinted. Today, a copy of the tome will set you back between $700 and $3,000.

But if you're not willing to pay top dollar for Klarman's investing insights, a lot can still be learned from the stocks his fund is buying right now. Here's a look at the four biggest bets Baupost Group made last quarter.
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By far, Baupost's biggest position increase last quarter was in ViaSat (VSAT - Get Report). The firm increased the value of its position in the stock by $145 million. ViaSat, which provides satellite and wireless communications systems, has significant business with both the U.S. government and the private sector.

ViaSat has seen its margins squeezed in recent years despite consistent revenue growth. That's due, in part, to a new focus on providing satellite-based broadband to consumers, a service that generally underperforms the government contract segment of ViaSat's business.

That said, ViaSat's profitability continues to be good overall, allowing the company plenty of leeway to see its consumer business bear out.

Developmental biopharmaceutical company Theravance (THRX) is another stock that Klarman is increasing his firm's position in. Baupost added $41.15 million in Theravance shares to its portfolio the latest quarter.

Once focused solely on developmental drugs, Theravance has now become commercially viable thanks to the FDA approval of the company's antibiotic Vibativ. Viativ, which is aimed at treating hospital-acquired pneumonia, could be the key to curbing major capital burn in Theravance's coffers right now, but major deals with the big pharma players could be equally compelling in the longer term. Theravance is currently working with GlaxoSmithKline (GSK - Get Report) to develop a new respiratory therapy designed to take the place of Advair, a drug that's already commercially successful.
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GSK $43.38 -0.22%
SLRC $17.72 -0.62%
THRX $12.35 -0.96%
TEL $60.12 -1.36%
VSAT $78.05 0.57%


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