Klarman Invests $100M in AI Stocks, Diversifies Portfolio

Klarman diversifies Baupost's portfolio with over $100 million in AI stocks, increasing tech sector exposure amidst market shifts.

By Alex P. Chase

5/15, 18:43 EDT

Key Takeaway

  • Seth Klarman invests over $100 million in AI-linked Outbrain, making it his ninth largest position, and buys into Soundhound AI and GDS Holdings.
  • Despite concerns over an "everything bubble," Klarman increases tech sector exposure after a significant price drop in tech stocks.
  • Beyond tech, Klarman views real estate as a valuable investment area, diversifying his portfolio across various sectors.

Klarman's AI Investment Moves

Baupost Group's CEO Seth Klarman, renowned for his value investing approach, has recently diversified his portfolio by investing in several artificial intelligence (AI)-linked stocks, as revealed in a new regulatory filing. Among these investments, Klarman has notably placed over $100 million into Outbrain, a web recommendation platform leveraging AI to serve advertisers and media owners, making it his ninth largest position. Additionally, Klarman made a smaller investment in Soundhound AI, a company specializing in voice AI and speech recognition, valued at approximately $6.7 million. Further expanding his tech footprint, Klarman also acquired American Depositary Receipts (ADRs) of GDS Holdings, a firm that develops and operates high-performance data centers in China, integrating AI technology into its operations.

Tech Sector Exposure Increases

Seth Klarman, often compared to Warren Buffett for his disciplined investment strategy, has progressively increased his exposure to the technology sector, capitalizing on its rapid growth. This strategic shift comes after a significant price reduction in tech stocks, presenting an attractive entry point for value investors like Klarman. Managing a portfolio worth $30 billion at Baupost, Klarman has expressed concerns over an "everything bubble," encompassing cryptocurrencies, SPACs, and other speculative trends, in a rare interview with CNBC last year. Despite these concerns, Klarman continues to explore undervalued opportunities within the tech landscape, demonstrating his confidence in the sector's long-term potential.

Real Estate as a "Hunting Ground"

Beyond technology, Klarman has identified real estate as a fertile area for investment, referring to it as a "hunting ground." This perspective underscores his strategy of seeking value in overlooked market segments. Klarman's approach involves injecting capital into undervalued properties and making rescue loans, indicating a broad investment strategy that extends beyond the tech sector. This diversification reflects Klarman's adaptability and his commitment to finding value across different market conditions and sectors.

Management Quotes

  • Seth Klarman, Baupost:

    "Real estate has become a 'hunting ground,' allowing him 'to buy, to inject capital, to make some rescue loans.'"