Seth Klarman
Baupost Group
Some people say that Seth Klarman was born
with economics in his blood. Mr. Klarman
was born in New York in 1957 and grew up in Baltimore. His father was a public health economist, and
so his interest in economics was nurtured even from an early age. He bought his first share of stock at ten
years of age. He earned his B.A. in
economics from Cornell in 1979 and launched his career by taking a full time
position with Mutual Shares Corporation.
He then went on to get his MBA from Harvard Business School in
1982. In the same year, he also founded
the Baupost Group.
Today, Seth Klarman is CEO of The Baupost
Group, and it is considered one of the top ranking hedge fund companies in the
world, with well over twenty billion dollars in assets as of 2010. With only one negative year since founding in
1982, and a gross return of 20% per year, the success rate of the Baupost group
and Seth Klarman is nearly legendary.
The Baupost Group prides itself on putting the client first, charging a
fair fee, and always focusing on the client's best interests. Combined with their insistence on mutual
respect in the workplace, and the purpose of the group being to help people
invest in businesses rather than just “play the stock market”, they have made a
very successful, if perhaps somewhat unusual, reputation for themselves.
Mr. Klarman has not been as secretive about
his methods and business philosophies as some might expect, however. He considers himself to be a value investor
and in assorted articles and interviews, has advised people not to panic when
the market loses a few points. His 1991
book on conservative value investing
is out of print, but copies of it have sold for as much as $2,000 and
there are even rumors that some people who own the book rent their copies
out. He also was editor of the 6th
edition of Security
Analysis by Graham and Dodd in 2008.
His own investment style is considered unconventional, but
conservative. Sometimes his personal
portfolio has held over 50% in cash, and he is not averse to waiting on the
sidelines with cash until he sees an investment where he recognizes the
potential and is comfortable with the price.
Some have considered his choices of investment unusual at times, but
they can't argue with his continued success.
Mr. Klarman has been quoted as saying that there is a gene for value
investing, and that it comes naturally to him to know what investments to pick
and how to manage them. He doesn't have
a Bloomberg terminal at his desk, preferring to rely on reports and his
computer along with the phone. He usually chooses to start the day checking
through the newspaper financial sections with colleagues as they plan out the
day.
Generally soft spoken, calm and humble when compared to many
other hedge fund experts, Seth Klarman also takes time for family and a private
life that isn't always focused on economics.
He keeps his life as private as is reasonably possible, refusing to
consider himself as anything like a celebrity or public figure except in a
quiet and conservative sense. He and his
wife Beth met on a Boston Harbor cruise in 1982, and have three children. They currently live in Brookline
Massachusetts. He has always made it a
point to do things like taking time for coaching his children's soccer teams as
well as going to his children’s piano recitals.
Seth has two interests dating back to his childhood that are
still a big part of his life. Horses and
baseball are the two interests. In 1993,
he and Jeff Ravich started Klaravich stables.
While not primarily done as a financial investment so much as from the
love of horses, their horses do well in the races, placing in the money about
50% of the time. Mr. Klarman had been
quoted as saying that when one of his horses raced in the 2004 Derby it was his
greatest thrill in that sport. In 2009,
he saw an opportunity many fans would envy to be able to have as an investment. He purchased a minority interest in the
Boston Red Sox. Baseball was a passion
for him just like horseracing so in my ways this was a dream come true for him
as well as a smart investment.
In recent decades, however, Seth Klarman, along with his
wife Beth, has turned their interests more towards philanthropy. Feeling that he has more money than he
personally will ever need and more than his family will need gave him the
initiative to found the Klarman Family foundation in 1990. Beth is the president of the foundation, and
she and Seth are both very active with supporting the causes they hold dear.
Seth and Beth Klarman share a strong commitment to the idea that we all have an
obligation to leave the world a better place than we found it and The Klarman
Family foundation generously supports many worthy causes, from music to
supporting research into eating disorders.
They feel that in today's challenging financial environment charities
and other supportive activities will be harder pressed than ever before to meet
growing needs
Seth Klarman and the Baupost Group have also been giving
special priority to new clients who represent educational foundations and
endowments. The reason for this is that
the world can benefit more from such organizations receiving help rather than
having the group focus only on individuals and their investments.
While his primary personal motivations for earning money may
have shifted over the decades, Seth Klarman has maintained an undeniable track
record for being one of the most successful hedge fund investments experts of
our time. As he has reached the age
where some people are considering the possibility of early retirement, Seth
appears to be far from retiring and seems to work harder than ever. Is there really a “gene” for value
investing? If there is, then Seth Klarman
certainly was born with it.
The BEST investor EVER, imho.
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