Seth Klarman

Investing Pro is a really handy tool that I use to keep track of my own watch list, but you can do a lot of things with it.

For example, you can check out the ideas tab, which helps you follow gurus like Buffett or Seth Klarman or other value investors.

And Propix AI is also a super useful tool to follow different investing themes over time.

For example, you can look at top value stocks.

That's the measure Ray Dalio focuses on.

It's also why Seth Klarman talks about a margin of safety.

Right now, that margin is very thin.

Let's be honest, but expensive is not the same as wrong.

It's going to be grossly misleading, and it's going to cause you to overpay if you end up doing that.

But even after coming to the conclusion that a 9% a year growth rate seems plausible for this particular business, we're going to apply our Warren Buffett, Seth Klarman, Benjamin Graham, Howard Marks margin of safety to it.

In other words, we're going to ask, okay, but what if we're wrong? And Warren would ask, can it still make me good returns even if I'm wrong? So we don't apply the 9% growth rate.

We believe that is what it's probably going to achieve, but we don't apply that.

Markets have fat tails, meaning that absurd events are more common than you might expect.

Indeed, famed value investor Seth Klarman declined an opportunity to invest in the fund partly because of this assumption.

He said that the firm should fear ...

I'm up at 5 a.m. and work hard to keep our way alive.

And the underlying principle is essentially if we're going to commit our savings to a business, we should want more evidence than one impressive set of results.

Seth Klarman's emphasis on protecting capital reinforces the same idea.

We need to understand what could go wrong, not just what might go right.

And that means questioning whether today's profits are representative of the business's longer-term earning ability.

And then Balpost, which is one of the most eminent hedge funds or investment firms.

Klarman? Yeah, Klarman.

They'd done a lot of real estate.

So they'd done equity.

Because guess what? When you think it's gonna be another boring quarter, it just never is.

We have some really big moves going down right now from Warren Buffett, Bill Ackman, Mohnish Pabrai, Seth Klarman, Li Lu, and more.

And if you're new here and you're wondering how we know this, well, every three months, investment managers with over $100 million in assets under management, they are required to file what's known as a 13F filing with the SEC, and these documents show us pretty much exactly what the big money managers of the world hold in their portfolios.

It's a very, very cool little hack that we've got.

So I think Mohnish likes this one a lot.

So if you're interested, definitely check this one out further in the portfolio I have linked below.

But let's move on into the fourth big move coming out of the latest 13Fs, and it is Seth Klarman upping his stake in Amazon.

Baupost added 20% to their Amazon stake, which is right at the top of their portfolio, now occupying 16%, so it is ripping clear in that number one spot.

But there are value investors who hunt for more obscure things than that.

Seth Klarman, for example, famously invested in claims against the massive Ponzi scheme of Bernie Madoff.

After finding an asset that you understand, you should insist on a bargain price.

Basically, you are going on a treasure hunt.

When Tom pits these two companies against each other, I think it should be clear that Kindred is riskier than PepsiCo.

The implication is that Tom should require a larger margin of safety when investing in Kindred compared to PepsiCo.

Seth Klarman probably explained the concept of a margin of safety the best.

"A margin of safety is necessary because valuation is an imprecise art.