Baupost Group’s Portfolio & 10 Largest Public Equity Investments

Baupost’s public-equity portfolio is not heavily diversified. Instead, its holdings are concentrated, featuring high-conviction ideas. The portfolio numbers only 34 equities, the 10 most significant of which account for 69.2% of its total composition. The fund’s largest holding is Qorvo, Inc. (QRVO), occupying around 11.9% of the total portfolio.

Source: 13F filing, Author

Qorvo, Inc. (QRVO)

Qorvo develops and markets technologies and products for wireless and wired connectivity worldwide. It is the fund’s largest holding. If the forecasts regarding 5G are realized, the semiconductor industry (along with Qorvo) is likely to enjoy massive growth over the next few years.

At the same time, the company’s revenues are expanding, and Qorvo has started delivering sturdy profits as well. Shares are currently trading at around 25.3 times the company’s forward net income, which reflects Qorvo’s growth catalysts.

Baupost trimmed its position by around 2% during the latest quarter. The company is now the fund’s largest holding.

Viasat, Inc. (VSAT)

Media conglomerate Viasat is Baupost’s second-largest holding, accounting for roughly 11.9% of its portfolio. In the current landscape, the legacy media conglomerates have been in trouble as content creation is becoming increasingly decentralized.

Companies such as Netflix (NFLX), Amazon (AMZN), and even Apple (AAPL) have started producing their own content, while the news outlets have moved mostly online, generating sales through ads or a subscription fee.

In our view, Baupost holds a stake in Viasat as an activist investor due to the fund holding 21.9% of its total outstanding shares. This indicates the possibility that Baupost wants to have an active influence on how the company is run, with a potential aim towards modernizing.

For retail investors, the position could be a risky long-term bet, though an admittedly attractively priced one.

Veritiv Corporation (VRTV)

Veritiv Corporation functions as a B2B provider of value-added packaging products and services, as well as facility solutions, print, and publishing products and services internationally.

Note that while Veritiv’s shares have performed well over the past three years, the company’s business model suffers from extremely low margins. Net income margins over the past four quarters amount to just 4.4%. Hence the company’s ultra-low valuation multiple of 0.2X from a price/sales perspective.

The company is Baupost’s third-largest holding and was trimmed by just 3% during the quarter. Baupost holds around 22.9% of the company’s total shares, meaning it has an active influence on the company. The fund has been accumulating shares since Q3-2014.

Fiserv, Inc. (FISV)

Fiserv is a relatively new holding for Baupost. It was initiated in Q4 2021. Fiserv provides payment and financial services technology all over the globe, operating through its Acceptance, Fintech, and Payments segments. These include point-of-sale merchant acquiring and digital commerce solutions, security, and fraud solutions, among other services.

The company’s margin-rich business model is quite robust, resulting in consistent revenue and income growth. Shares are currently trading at a reasonable forward P/E of 14.2, while management has historically rewarded shareholders through stock repurchases.

Baupost held its stake in the company stable during the latest quarter.

The Liberty SiriusXM Group (LSXMA) (LSXMK)

Baupost initiated a position in The Liberty SiriusXM Group in Q1-2020 and has since grown its equity stake steadily. The company specializes in the entertainment business in the U.S. and Canada. It offers music, comedy, talk, news, weather channels, podcast, and infotainment services via its proprietary satellite radio systems, streamed applications for mobile devices, and other consumer electronic products.

While the company has managed to gradually grow its revenues, net income margins have struggled to expand, leading to somewhat weak profitability.

Baupost boosted both its positions in the Liberty SiriusXM Group by 4% during the previous quarter. The two classes of stock, A, and K, account for 6.3% of its portfolio each.

Warner Bros. Discovery, Inc. (WBD)

Warner Bros. Discovery is an international mass media company and one of the largest in the space globally. The stock has now declined to the same levels it was trading 15 years ago, as the combined company has had a hard time integrating its assets and having them produce solid cash flow. On the one hand, Warner Bros. Discover has already achieved $750 million in incremental synergies this year, while from next year, those synergies are expected to rev notably to $2.75 billion for 2023 and $3.5 billion in 2024+. On the other, such improvements remain highly uncertain.

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