Seth Klarman


Seth Klarman (born 1957) is an American billionaire who founded the Baupost Group, a Boston-based private investment partnership, and the author of a book on value investing titled Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor.


Education

Klarman grew up in a Jewish family in Baltimore, where his father was a public health economist at Johns Hopkins University and his mother taught high school English. Klarman is a graduate of Cornell University where he was a member of the Delta Chi Fraternity and Harvard Business School where he was a Baker Scholar and was classmates with Jeffrey Immelt, Steve Burke, Stephen Mandel and Jamie Dimon.


Career

Before founding Baupost, Klarman worked for Max Heine and Michael Price of the Mutual Shares fund (now a part of Franklin Templeton Investments). He founded the Baupost Group in 1982, which managed USD 22 Billion as of 2010.

Despite his unconventional strategies, he has consistently achieved high returns. He is a very conservative investor, and often holds a significant amount of cash in his investment portfolios, sometimes in excess of 50% of the total. He often makes unusual investments, buying unpopular assets while they are undervalued, using complex derivatives, and buying put options.

Klarman typically keeps a low profile, rarely speaking in public or granting interviews. However, in 2006, he spoke pessimistically about the stock market and warned of future inflation. He is sometimes referred to as "the Warren Buffett of his generation".

In 1991, Klarman authored Margin of Safety, Risk Averse Investing Strategies for the Thoughtful Investor, which since has become a value investing classic. Now out of print, Margin of Safety has sold on Amazon for $1,200 and eBay for $2,000.

In 2014 Forbes listed Seth Klarman as one of the 25 Highest-Earning hedge fund managers in 2013. His 2013 total earnings of $350 million ranks him the 20th among the 25 top earning hedge fund managers.

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"Investing is the intersection of economics and psychology. The economics, the valuation of the business, is not hard. The psychology -- How much do you buy? Do you buy it at this price? Do you wait for a lower price? What do you do when it looks like the world might end? Those are the harder things."


"We sort of are with the most opposite. We buy when the market is down. We sell when it's up.