Somehow I missed this when it was released…..sorry
Baupost Group head and value investor extraordinaire (by that I mean 20% plus annual returns) Seth Klarman has increased his stake in Borders Group (BGP).
Baupost now holds 5.72 million shares, up from 4.9 million held in the May filing.
What is really odd about the filing is the number of “blank check coporations” or SPAC’s Klarman owns shares in.
There is :
Capitol Acquisition Corp. (CLA)- 2.1m shares
BPW Acquisition Corp. (BPW)- 1.1 m shares (including warrants)
China Holdings Acquisition Corp. (HOL)- 1.05m shares
Columbus Acquisition Corp.- (BUS.U)- 750k shares
GHL Acquisition Corp (GHQ)- 3.5m shares (including warrants)
Global Consumer Acquisition Corp. (GHC)- 5.9m shares (including warrants)
GSC ACquisition Corp. (GGA)- 850k shares
Hicks Acquisition Corp. (TOH)- 1.9m shares
Highlands Acquisition Corp. (HIA)- 525k shares
Prospect Acquisition Corp. (PAX)- 3.4m shares (including warrants)
There are a total of 22 SPAC’s listed in the filing. I could not find any relationship to them other than the investment by Klarman and Baupost. It is odd and warrants more looking into. It does seem a bit odd that the SPAC’s are alleged to be “gambling” for ordinary investors but here we have a true value investor, and a very good one going headfirst into these things..
Disclosure (“none” means no position):
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4 replies on “Seth Klarman Increases Borders Stake and Invests Heavily in SPAC’s”
There is a very good article in the Marh 31, 2008 Value Investor Insight on the subject of SPACs. The article is mainly about Phil Goldstein’s Bulldog Investors, but Goldstein does go into detail on why SPACs are conservative investments that also offers a good deal of upside potential.
i’ll check it out
Interesting.. this is probably as close as a regular joe can get to participate in private equity deals.
Investing in a SPAC is essentially buying a call option without having to pay a premium. If no deal is signed/closed in the allotted time then the money in the trust is returned plus interest. Depending on the expense structure it could be slightly lower or higher than the public offering price. If a deal is struck, shareholders get a chance to vote on it so it isn’t likely that a terrible deal would be agreed to. So as far as value investors wanting the invest where there is a no-brainer reward to risk (in this case pretty close to zero risk) it is a good place to park some money.