Preakness is Latest Victory for Hedge Fund Billionaire Seth Klarman
Baupost Group head known as one of the industry’s most emulated so-called value investors
Hedge-fund manager Seth Klarman, shown here in 2015, co-owns the horse that won the Preakness Stakes on Saturday. Another horse with Wall Street ties won the Kentucky Derby earlier in the month. PHOTO: ANDREW GOMBERT/EUROPEAN PRESSPHOTO AGENCY
No horse will win the coveted Triple Crown this year. But Wall Street financiers still have a chance at a sweep.
On Saturday, a horse named Cloud Computing and co-owned by billionaire hedge-fund manager Seth Klarman scored a surprising victory in the 142nd Preakness Stakes. That came just two weeks after Vincent Viola, founder and executive chairman of trading firm Virtu Financial Inc., won the Kentucky Derby with a horse he co-owns, Always Dreaming.
Up next will be the Belmont Stakes on June 10, where both horses—and perhaps others with Wall Street ties—are expected to race.
The Preakness victory thrust into the spotlight Mr. Klarman, a strapping, bearded Boston hedge-fund manager who infrequently speaks in public. That hasn’t stopped him from earning renown as one of the most emulated so-called value investors in the industry. Head of the Baupost Group, Mr. Klarman makes large, long-term investments in assets he believes to be undervalued, and frequently holds billions of dollars in cash so that he can move quickly when opportunity strikes.
A collection of his protégés run separate multibillion-dollar Boston hedge-fund firms with similar approaches, spreading his style further.
Mr. Klarman wrote a 1991 book titled “Margin of Safety,” a reference to the investing term coined by Benjamin Graham, considered by many to be the father of financial analysis. The book is now out-of-print, and sells for thousands of dollars online.
Recently, Mr. Klarman has gained attention outside the trading desk. In 2015, he underwent cardiac bypass surgery in response to a routine checkup that “revealed some concerns,” according to an investor letter at the time. The surgery was a success though it temporarily sidelined Mr. Klarman at the firm.
A heavy political donor to both parties who has leaned Republican, Mr. Klarman nonetheless came out against that party’s nominee in the last presidential election. In a widely-disseminated investor letter in January, he described himself as “troubled” by President Donald Trump. “As a student of history, I know that democracies are fragile and cannot be taken for granted,” he warned.
To steel for the unknown, Baupost was then holding $10 billion, or roughly one-third of its portfolio, in cash.
Sunday, Mr. Klarman’s celebratory weekend continues: it is his 60th birthday.
Write to Rob Copeland at rob.copeland@wsj.com
