Billionaire investor Seth Klarman, who has a net worth of more than $1 billion, is a very smart portfolio manager who runs the show over at Baupost Group. While Klarman may not make the headlines as much as the likes of other billionaire investment legends, his value investment principles, I think, are some of the best out there.
Like the Oracle of Omaha, Warren Buffett, Klarman (who’s known by some as the Oracle of Boston) follows the teachings of the great Benjamin Graham. And like Graham, Klarman is the author of the famed Margin of Safety book, which is a must-read for DIY investors.
In any case, Klarman and Baupost are worth keeping close tabs on during 13-F filing season. Arguably, they’re more worth following than many larger funds out there. In the second quarter, Klarman and his team were quite active, with a number of buys and sells.
In this piece, we’ll explore three names that were scooped up and whether they still make sense to initiate a position as the third quarter comes to an end. And, of course, time will tell what Baupost has done more recently (in this third quarter) with their Q2 buys.
Alphabet
Baupost added to its position in shares of Google-owner Alphabet (NASDAQ:GOOG), and what a brilliant and well-timed buy it was, as GOOG stock has gained more than 45% since the start of the third quarter. Indeed, investors who buy the stock today, at just shy of $250 per share, will be paying a much higher price of admission than Klarman and other big-name hedge funds that punched their ticket. Still, I view GOOG stock as a great value buy and don’t think investors have really missed much of anything when considering the long-term opportunity in AI.
At 26.3 times trailing price-to-earnings (P/E), I still see GOOG stock as underappreciated. Given how good Gemini has become relative to other language models out there, and how well the firm applies new technologies, I’d argue a P/E multiple closer to 35 times P/E is more warranted.
Outside of search and the AI cloud, robotaxis and social media (think Veo 3 plus YouTube Shorts or Mixboard) stand out as profound growth engines that Wall Street might not be bullish enough on. Perhaps there’s a reason GOOG stock is the largest holding in Baupost as of the end of Q2.
Dollar General
Dollar General (NYSE:DG) was another outstanding value buy made by Baupost in the second quarter. Like with Alphabet, Klarman and company added to their position last quarter. Since the end of Q2, shares have gained close to 6%, making DG shares a worthy addition for investors who aren’t looking to chase newfound momentum. In many ways, Dollar General stands out as a classic value stock. Shares trade at 18.9 times trailing P/E to go with a 2.3% dividend yield.
And despite impressive year-to-date gains (up 35%), DG remains a country mile (around 60%) away from its prior peak. With a Q2 earnings beat under its belt and a nice guidance raise, dip-buyers now have something to get upbeat about. The company is confident it can dodge and weave past inflation’s blow, and I wouldn’t doubt the firm as it heads back on the road to recovery.
Fiserv
Finally, Fiserv (NYSE:FI) was a new addition for Klarman in the second quarter. Shares of the fintech firm got crushed this year, tanking by around 45% from its early-2025 highs. Since the second quarter, shares have continued to drop like a rock, opening up a window of opportunity for investors to get a lower price of admission than some recent big-money buyers of the stock.
The $70 billion company took another hit on earning,s and while there are headwinds, I think the dip is more than buyable, especially with shares going for 21.6 times trailing P/E. Over the long run, I do think Klarman will be proven right for buying the dip in the payment processor.
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