Baupost Group’s (Seth Klarman) 2011 Returns

I guess for some journalists a 30% cash position is encouraging news:

The Boston-based manager’s partnerships were down between 0.25 percent and 0.60 percent in June. As a result, they are up 2.25 percent to 2. 75 percent for the year to date.

Not too shabby given the very conservative nature of the funds.

The super-secretive hedge fund manager, who at year-end was the eleventh largest in the world with $23.4 billion under management, is said to be 30 percent in cash. Although this sounds like a lot, keep in mind that Klarman stresses preservation of capital first, then returns. On average he has 30 percent of his assets in cash, and from time to time has put as much as 40 percent or 50 percent in cash, as was the case in 2006 and 2007 before the global markets imploded.

Given the virtually non-existent returns on cash these days, Klarman’s performance is even more impressive this year. And he has outperformed the S&P 500 virtually every year in the past decade, his oldest partnership racking up a roughly 19 percent annualized return since inception in 1983.

In fact, it is a little encouraging that Klarman has “just” 30 percent of his assets in cash. It suggests he has been buying lately, although sources are in the dark about specific investments.

Or, he could be returning capital to his investors…

Read the whole thing:

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