As value investors, we seek to achieve attractive, risk-adjusted returns over an extended period of time.
While we strive to adhere to the enduring principles of value-investing, we recognize that the world and opportunity set are rapidly evolving, and we remain flexible in their application. This flexible mandate allows us to gain exposure to opportunities across diverse industries, geographies, asset classes, and security types. The composition of our portfolio should be expected to vary significantly over time, in response to the ebb and flow of opportunity—an approach we believe serves both to reduce risk and enhance return.
We search for mispricings on a bottom-up basis, one investment at a time, and our approach is often idiosyncratic—we like to find opportunity off the beaten path. When we invest in areas where Baupost has apparent edge, such as highly complex, bespoke, or process-driven investments, we can anticipate the possibility of earning especially attractive returns for the risks involved.
We remain anchored to valuation and focused on business fundamentals while seeking to uncover catalysts that reduce dependence on the level of the markets to drive investment outcomes.
We tenaciously pursue attractive investment results, but always with an eye to limiting or mitigating downside risk. We accomplish this through deep fundamental analysis, by focusing on investments where catalysts for value realization are present, by employing prudent diversification, and by avoiding the incurrence of recourse leverage on our portfolio. We also seek to build an overlay of market and macro hedges on top of the portfolio to limit potential downside. Above all else, we strive to safely grow our clients’ capital over time. While we do not attempt to time the markets, when we are unable to find investments that are sufficiently attractive on an absolute basis, we will typically hold cash and cash equivalents until better opportunities emerge.
Investment Team:
While we segment our investment team into distinct units, at our core we are one cohesive, skilled, and deeply curious team. We find that some of our best ideas often come from cross-collaboration among two or more of the groups.
How we Invest:
Credit
Baupost has an extensive history of successfully investing in a wide range of public and private credit instruments including structured products. In particular, we focus on the debt of corporate issuers under some degree of financial stress, including companies that have been downgraded, are in bankruptcy or in the midst of a restructuring. We also originate loans in circumstances where our flexible capital can provide a unique solution that is not readily available in traditional credit markets.
Public Equities
Baupost pursues public equity investments where we find identifiable mispricing. Our equity holdings often involve the presence of a catalyst for value realization, such as a business combination or sale, corporate spinoff, or liquidation.
Our credit and equity teams are comprised of generalists who over time have built subject-matter expertise on specific instruments, industries, and geographies.
Private Investment
Baupost operates largely outside of the traditional private equity model, using our flexible mandate, duration of capital, ability to move quickly, and ability to write a large check to provide bespoke financing solutions to companies. We regularly partner with companies to provide debt, preferred, or equity capital. Those solutions may include crossover public/private investments; structured investments; recapitalization, expansion, and platform investments; carve-outs; and, transactions with family-owned or founder-led businesses.
Real Estate
Working both independently and through joint ventures, the firm has deep real estate investing experience across public and private markets, including in equity and credit; in the development and re-development of commercial, residential, and mixed-use properties; ground leases, leaseholds, and complex ownership structures; lending; and asset management, both in the U.S. and abroad.