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Why Twenty-First Century Fox Remains Seth Klarman’s Favorite Bet


Feb. 22 2019, Published 8:08 a.m. ET

Seth Klarman’s bets

In this series, we’ll look at where billionaire hedge fund manager Seth Klarman, who some have hailed as the next Warren Buffett (BRK-B), is placing his bets. Klarman’s portfolio value at the end of the fourth quarter was $11.5 billion, a decline of 12% from the previous quarter. For the fourth quarter, Klarman’s biggest bets were Twenty-First Century Fox (FOX) (FOXA), Cheniere Energy (LNG), ViaSat (VSAT), Qorvo (QRVO), and Allergan (AGN), which together constitute 53.9% of his total portfolio.

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Twenty-First Century Fox

Twenty-First Century Fox is currently the single biggest position in Klarman’s portfolio, accounting for 28.5% of it. While Klarman slightly trimmed his stake in Fox during the quarter, he mostly added the stock at lower prices during the previous quarters. He first bought the company in Q3 2015.

Windfall after deal with Disney

Walt Disney (DIS) agreed to purchase most of 21st Century Fox’s entertainment assets for $71.3 billion in cash and stock following a bidding war with Comcast (CMCSA), which also sought to purchase the assets.

Upon closing the deal with Disney, the new company will be called Fox Corporation, which will primarily focus on news and sports programming. Sports programming has emerged as an area of interest for Internet companies such as Amazon (AMZN) and Facebook (FB), which have in recent months acquired the broadcasting rights to various high-profile sports. Fox Corporation’s focus on news and sports programming will likely protect it from competition from Netflix (NFLX), a major disruptor of the traditional media industry.

According to many experts, including Mario Gabelli, Fox should be a significant cash generator over the coming few years. Moreover, the merger deal should provide upside potential to investors.

In the next part, we’ll discuss the rest of Klarman’s biggest bets.


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