Seth Klarman Doubles Down on Horizon Lines (HRZ)
As of his last filing, Klarman’s Baupost Group owned 3.8M shares. Today’s filing raises his stake to 7.1M shares or 23.74% of the company. I posted my more timid assessment of the company a few weeks ago. Perhaps I need a little more courage in my convictions. Maybe I’ll have to mull over HRZ some more.
But Klarman’s moves have always been a little more esoteric and harder for average investors to piggyback, compared to someone like Warren Buffett or Bruce Berkowitz. I mean, has anyone reverse-engineered his AC Moore (ACMR) investment? I looked at it briefly but couldn’t find the golden nugget. He also has all the SPAC investments and of course, the monster stake in Sallie Mae (SLM).
In any case, I’ll be keeping an eye on HRZ.
More on this topic
(What's this?)
Rising Tide is Not Lifting All Boats; The case for a New Net/Net: AC Moore (ACMR)
(Cheap Stocks, 10/29/08)
Moore (AC) For Less
(Cheap Stocks, 11/19/08)
Horizon Lines releases first quarter results
(The Shipping Stocks Blog, 4/29/09)
May 10th, 2008 at 3:28 am
I’m really confused with the FCF figures. In their most recent 10Q they estimated capital expenditures of 25-30 mil and vessel dry-docking payments of 19 mil for 08. This gives me a FCF figure of about 24mil??
I also found it impossible to reverse engineer ACMR. As for the SPACs, we all know Klarman is a particularly risk averse investor. With SPAC rules, the acquisition company can’t purchase a private business without getting majority shareholder approval. As Klarman manages billions of dollars, he has the capital to buy a basket of these SPACs and be the majority shareholder in all of them. This way he has access to private companies and he essentially decides whether to buy them or not. If not, then he gets about 95% of his money back (5% fees etc.) A place to put excess cash with virtually no risk and potentially large upside.
May 15th, 2008 at 9:13 am
Kuuks,
Sorry for the delay in response. Moving has kept me busy.
I’m not sure which revenue figures you’re using to get your FCF number. In their slide presentations, they give a reconciliation of the FCF so you can see exactly how they get to their numbers.
SPACs probably make a lot of sense for him. I’m sure Baupost is one of the first places scheduled for the investment roadshow these days. My point is that one of the primary considerations for these SPACs is the management team. Klarman and his team get to meet these guys — little guys like me have a harder time assessing them.