Value investors seeking inspiration should watch billionaire investor Seth Klarman, who runs Baupost Group. In the first quarter, the investor made significant changes that might raise questions.
Baupost Group reduced its Warner Bros. Discovery (WBD) position from 25.24 million shares in Q3 to 3.71 million shares. WBD shares traded between $10 to as high as over $12 in the fourth quarter of 2023. Between January and March 2024, the stock traded below $9.00.
The firm sold its entire position in Tower Semiconductor (TSEM). Intel (INTC) wanted to buy the firm for $5.4 billion. However, the firms terminated the deal last November 2023. Intel paid a $314 million termination fee (net).
In the quarter, Baupost added 1.13 million shares of SoundHound, which provides voice artificial intelligence solutions. This is a puzzling AI purchase, since voice AI has no moat. Amazon (AMZN) offered voice-powered assistance for many years. Apple (AAPL) has Siri powering its devices. Additionally, other firms will monetize AI faster than Soundhound. For example, Microsoft (MSFT) and Alphabet (GOOG) will grow the most from AI solutions. Nvidia (NVDA) and Super Micro Computer (SMCI) will sell billions of dollars worth of AI-related hardware.
Finally, the 33.6% increase in Herbalife (HLF), to 2.24 million shares, is risky. The firm was previously viewed as a multi-level marketing or a pyramid selling scheme.
