market folly

Hedge fund Baupost Group has filed an amended 13G on Omnova Solutions (OMN) and has disclosed a 7.4% ownership stake due to activity on April 30th, 2009. They now own 3,242,800 shares. This is not a new position for Klarman, as they previously owned 5,920,750 shares. That 5.9 million shares figure was as of December 31st, 2008 when we looked at Baupost's entire portfolio. Since December, Baupost has obviously decreased their position in Omnova. As you can see, we've covered Klarman's moves and will update his entire long portfolio when it is filed in a week or two via 13F filing.

Klarman has been quite busy lately, filing a flurry of 13D's and 13G's with the SEC. Most recently, we noted that Baupost has gone activist on both their Breitburn stake and their Facet Biotech stake. In addition to their filings, Klarman himself sat down and gave a video presentation that outlines his investment philosophies and thoughts on the current market.

Baupost Group's outperformance over the years is one of the main reasons that we selected them as one of the hedge funds in our custom Market Folly portfolio. Our model hedge fund portfolio has seen a total return of 194% since mid-2002 and is returning 17% annualized thanks in part to Baupost. We created the model portfolio with Alphaclone, where you can replicate hedge fund positions & portfolios for your own investment.

Klarman's hedge fund was recently ranked 13th in the 2009 hedge fund rankings, jumping way up from being ranked 49th in Alpha's 2008 rankings. Klarman has always considered himself a value investor and has been patient through the market turmoil. The past few years they have had nearly half their $14 billion in assets in cash. But, with turmoil comes opportunity and Baupost's cash has been gradually deployed. To see why they've begun deploying capital, we'll leave you with some of Klarman's additional thoughts on recent market action in his interview with Harvard Business School and his thoughts from Value Investor Insight. Klarman once wrote, "At Baupost, we are big fans of fear, and in investing, it is clearly better to be scared than sorry." His investment process is also further detailed in his hard to find book Margin of Safety.

Taken from Google Finance,

Omnova Solutions is "a provider of emulsion polymers, specialty chemicals and decorative and functional surfaces for a variety of commercial, industrial and residential end uses. The Company’s products provide a range of functional and aesthetic benefits to products that people use daily. OMNOVA operates in two business segments: Performance Chemicals and Decorative Products."