After Twenty-First Century Fox (FOX) (FOXA), Cheniere Energy (LNG) is Seth Klarman’s biggest bet, accounting for 7.3% of Baupost Group’s portfolio for the quarter ended in December 2018. Cheniere’s stock price had increased by 13% YTD as of February 19, outperforming the broader markets (SPY) (DIA). Expected higher demand for liquified natural gas after geopolitical tensions gradually easing could be one of the drivers. Cheniere Energy, the leading LNG exporter, has recorded substantial earnings growth in the last couple of years, which was reflected in its market performance. The stock has more than doubled over the last three years.
ViaSat (VSAT) is another key bet for Seth Klarman, and it accounts for 7% of his portfolio. Klarman first purchased VSAT in 2008 at a price considerably lower than what the stock is currently trading at. The fund manager also controls ~23% of VSAT. VSAT’s stock price has surged ~27% YTD. Its fourth-quarter earnings exceeded expectations, which led to a stock price surge.
Qorvo and Allergan
Qorvo (QRVO) is a US semiconductor (SMH) company and provides core technologies and radio frequency solutions for mobile, infrastructure, and aerospace or defense applications. The stock accounted for 5.6% of Klarman’s portfolio at the end of the fourth quarter.
In the third quarter of fiscal 2019, Qorvo’s revenue fell 6% sequentially and 1.7% YoY to $832 million, beating analysts’ estimate and its revised guidance of $820 million. Its revenue fell due to a weak macroeconomic environment and low orders from Apple (AAPL). While Qorvo’s fiscal 2019 third-quarter earnings beat analysts’ estimate, its fiscal 2019 fourth-quarter revenue guidance of $670 million missed analysts’ estimate of $728 million by 13%. The stock has underperformed the broader markets (QQQ), which have risen 6.8% YTD.
Allergan (AGN) is another top bet for Klarman, accounting for 5.5% of the portfolio value. The drugmaker has been lagging peers and broader markets in stock price performance. David Tepper, another billionaire investor, stepped up pressure on the company to sell itself if it can’t turn around itself.