Seth Klarman just got back into Amazon and bought three other stocks. – MarketWatch
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Need to Know
Last Updated: Aug. 14, 2023 at 8:06 a.m. ET First Published: Aug. 14, 2023 at 6:35 a.m. ET
Critical information for the U.S. trading day
Seth Klarman, founder and CEO of the Baupost Group, is a new owner of Amazon.com, his 13-F filing shows.
Kevin Dietsch/Getty Images
[]Seth Klarman, the Baupost Group chief executive and value-investing legend, just re-edited Benjamin Graham’s and David Dodd’s classic tome “Security Analysis,” originally published in 1934. In an interview with Institutional Investor, he talked of his biggest investing mistake.
[]“The one I’m guilty of the most … is when you’ve stayed with a position a long time and you still believe in the thesis but you’re starting to grow a little skeptical about ‘Will it ever work?’ I think that the human tendency that I have that I shouldn’t have is to feel like … and this isn’t how I experience it but … maybe it owes you something. Maybe you’ll be a schmuck if you sell it now. You’ve waited all this time, you’ve paid your dues, it owes you. Stocks never owe you,” says Klarman, whose firm through the end of last year generated the eighth most gains of any hedge fund all-time, according to data compiled by LCH Investments.
[]He might be kicking himself if he applied that thinking to Lithia Motors LAD, +0.25%, a big automobile dealer that he sold sometime between April and the end of June when it was bumbling along, only to see the company now up 55% this year.
[]But probably the most interesting element in the new 13-F released after Friday’s closing bell are his buys, which include Amazon.com AMZN, +1.56%, a stock that was a top-20 position in his portfolio last year when he pounced on beaten-up tech stocks. After selling Amazon in the first quarter, he got back in.
[]At 91 times forecast current-quarter earnings, Amazon might not screen as a value stock, but it’s been a profitable trade no matter at which point the internet retailer and cloud-services provider was purchased in the second quarter. Amazon obviously has been a long-term success, and in the second quarter it demonstrated how a cost-efficiency drive could quickly boost its profits.
[]Baupost’s other three new positions are Dollar General, Union Pacific and CRH. Dollar General DG, -0.77% trades at 16 times earnings and on several metrics is more affordable than rival Dollar Tree DLTR, -1.12%. Then again, store traffic was down by a double-digit percentage in the second quarter, according to data from Citi. The discounter reports second-quarter results on Aug. 31.
[]Union Pacific UNP, +0.14% turned out to be another trade that quickly made a profit, as the stock shot up in late July on the naming of a new chief executive, even as earnings and revenue missed analyst estimates. Similar to Dollar General, Union Pacific is suffering from negative volume traffic growth, so the company’s prospects will turn on its ability to improve efficiency.
[]CRH CRH, +0.15% is an Irish-headquartered building-materials supplier that makes three-quarters of its earnings from the U.S. and is moving its primary stock-market listing to the New York Stock Exchange. It is considerably cheaper than U.S.-listed peers Martin Marietta Materials and Vulcan Materials.
The markets
[]U.S. stock futures ES00, +0.14% NQ00, +0.24% advanced, after the S&P 500 SPX declined by 0.3% last week, its second decline in a row. The yield on the 10-year Treasury BX:TMUBMUSD10Y was 4.16%.
[]For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.
The buzz
[]AMC Entertainment shares AMC, -35.55% tumbled after a court approved the conversion of the APE APE, +16.29% preference shares.
[]Tesla TSLA, -1.19% cut prices for some of its Model Y versions in China, as that market’s EV war heats up.
[]U.S. Steel X, +36.80% rejected a $7.3 billion bid from Cleveland-Cliffs CLF, +8.78%.
[]Exor took a 15% stake in Royal Philips PHG, +3.80%, the struggling Dutch health technology provider.
[]Mastercard MA, +0.91% took a minority stake in the fintech unit of South African telecom MTN at a $5.2 billion valuation.
Best of the web
[]The clean-energy future is arriving faster than you think. (John Arnold, the billionaire former energy trader, has an interesting response to that piece.)
[]Instead of sailing into the sunset, Carl Icahn is scrambling to save his empire.
[]Growing furor over ‘authoritarian’ police raid on Kansas newspaper.
Top tickers
[]Here were the most active stock-market tickers as of 6 a.m. Eastern.
| Ticker | Security name |
| TSLA, -1.19% | Tesla |
| AMC, -35.55% | AMC Entertainment |
| APE, +16.29% | AMC Entertainment preferreds |
| MULN, +0.99% | Mullen Automotive |
| NVDA, +7.09% | Nvidia |
| NIO, -2.95% | Nio |
| TTOO, +15.42% | T2 Biosystems |
| NKLA, -6.67% | Nikola |
| GME, -1.14% | GameStop |
| AAPL, +0.94% | Apple |
The chart
[]Paul Krugman, the Nobel laureate and New York Times columnist, says the Atlanta Fed’s sticky consumer-price index is sounding the all-clear. The gauge measures the components of the consumer-price index that historically change very little. It should, of course, be noted that Krugman wrote a column in September 2021 saying he remained at that stage on “Team Transitory” with regard to U.S. inflation.
Random reads
[]Mark Zuckerberg has given up on the idea that Elon Musk will fight him in a cage.
[]A 15-year-old survived a nearly 100-foot fall at the Grand Canyon.
[]This pitcher has a 3-13 record, a terrible earned-run average and is very valuable.
[]Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.
[]Listen to the Best New Ideas in Money podcast with MarketWatch financial columnist James Rogers and economist Stephanie Kelton.
‘Big Short’ trader Michael Burry loaded up on bearish options in second quarter, filing shows
[]Michael Burry, who rose to fame for his winning bets during the subprime crisis, loaded up on put options on the S&P 500 in the second quarter, a filing showed.
[]Steven Goldstein is based in London and responsible for MarketWatch’s coverage of financial markets in Europe, with a particular focus on global macro and commodities. Previously, he was Washington bureau chief, directing MarketWatch’s economic, political and regulatory coverage. Follow Steve on Twitter: @MKTWgoldstein.
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