Chris Lau - Seeking Alpha

Monday, February 08, 2010

Lead by Example: Seth Klarman

Seth Klarman is the founder and president of The Baupost Group, a Boston-based private investment partnership. He is a topic of discussion on kaChing's Investing IQ App's "The Intelligent Investor" group (now with 1,270 members).

In the video, Klarman discusses his investment philosophy. He prefers to look for securities that fly below the radar, that are involved in complicated situations (and are therefore ignored by the investment community), stocks that are out of favor (kicked out of a major index or not belonging to one). He also prefers significant and illiquid securities over significant and liquid securities.

Klarman is worth listening to: Baupost manages $1.7 Billion for 40 families encompassing 700, and his book, "Margin of Safety," is $1,100 on (although the price of a book does not indicate the value of its content, but its lack of availability). Most importantly, his investment approach is to start cautiously by identifying all the risks and by avoiding them by hedging.

Klarman is rarely heard or followed by the media, unlike, for example, Warren Buffet. Yet, both investors have similarities in their approach to the selection of securities. For this reason,the Harvard Business Review interview (link below) is a worthwhile watch.

On Writing Margin of Safety:

Here is a link to the full interview provided by Harvard Business School.

These are some of the hi-lights from the video on leadership:
  • On leadership, lead by example
  • Be there and be available to staff (Klarman has an open trading desk as opposed to an office, even though he isn't a "trader")
  • Empower others: let others shine if you know they can do so
  • Set an example to colleagues on a having a balanced work-life