I had no idea who Seth Klarman was until I read this article in today’s Wall Street Journal. I don’t closely follow the world of investors, except from a human interest perspective (what are these guys’ philosophies, what makes them tick). I must say that this guy is good, really good. As a fan of Black Swan theorist Nassim Taleb, I would admit it’s hard to tell if he’s lucky or good, but …
Sometimes I feel a bit lonely among the large crowd of economists and investment advisors who are diametrically opposed to me as an Austrian School student of economics. I think and analyze and read about this stuff constantly and when I find someone who agrees with my conclusions or at least the main concepts I have about the economy and economics, I feel something between vindication and pride.
Read this article and let me know what you think. I know many of my readers are far more sophisticated at investing than I am. But, after reading about Mr. Klarman and his commentary about the present situation, I think I would like to get to know him.
Seth Klarman is worth listening to, especially when markets go mad.
Mr. Klarman is president of the Baupost Group, an investment firm in Boston that manages $22 billion. His three private partnerships have returned an annual average of around 19% since inception in 1983—and nearly 17% annually over the past decade, as stocks went nowhere.
To measure Mr. Klarman’s importance as an investor, you need only see the value his rivals place upon his words. You could have earned at least a 20% average annual return since 1991—better than twice the performance of the market—merely by buying and holding Mr. Klarman’s book, “Margin of Safety”: Published that year at a cover price of $25, hard copies now fetch up to $2,400.
But the professorial Mr. Klarman speaks in public about as often as the Himalayan yeti. He made an exception last Tuesday, when I interviewed him in front of a standing-room-only crowd of 1,600 financial analysts at the CFA Institute annual meeting in Boston. He then made another exception, speaking with me over the phone later to clarify points that he feared had been misconstrued.
