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Famed value investor dumps HP, taking a loss

By
Stephen Gandel
Stephen Gandel
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By
Stephen Gandel
Stephen Gandel
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February 13, 2013, 11:25 PM ET
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Fortune — Famed value investor Seth Klarman is done with Hewlett-Packard (HPQ), and he’s taking a rare loss.

The hedge fund manager, who is a cult hero on Wall Street – his out of print book on value investing Margin of Safety sells for $2,500 on Amazon – sold all of his remain stake in the computer maker in the fourth quarter. Shares of HP have tumbled after CEO Meg Whitman in November decided to take an $8.8 billion write-down, saying a company it bought Autonomy just a year earlier was nearly worthless. Whitman says HP was misled by improper accounting.

It’s hard to know exactly how much Klarman, who bought the stock through his hedge fund Baupost Group, lost on his ill-timed HP investment. But Klarman’s fund at one point had amassed a stake of over a half a billion dollars in the stock. Klarman began buying HP’s shares in the third quarter of 2011, purchasing nearly 21 million shares at around $29. He was adding to his stake as lately as the second quarter of last year, bringing his holdings up to 26 million shares. Back then the stock was trading at around $20.

Klarman sold about half his stake in the third quarter, and dumped his remaining shares in the last three months of 2012, according to filings with the SEC. HP’s stock hit a low of just under $12 in November, and ended the year around $14. Worse for Klarman, HP’s stock has been climbing this year, and recently traded for $17. All told, Klarman’s fund’s loss is likely over $150 million.

Klarman is a colorful and reclusive investor. He is known to have bet against the housing bubble. He also bought, through an investment company, 2,300 hundred acres of Canadian farmland. Recently, Klarman has been suing investment banks saying that he and his investors were duped when his fund bought mortgage bonds shortly after the financial crisis betting on a rebound.

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