Seth Klarman's Baupost fund has likely scored a $190 million gain on Warner Bros. Discovery this year as 'Hogwarts: Legacy' sales boom
- Seth Klarman's Baupost has likely made a $190 million gain on Warner Bros. Discovery this year.
- The billionaire investor's hedge fund built a 1.3% stake worth almost $300 million last year.
Seth Klarman's Baupost Group has likely scored a nearly $200 million gain on Warner Bros. Discovery since the start of this year. The hype around "Hogwarts: Legacy" has helped propel the media stock up 65% over the past two months, meaning WBD rivals Tesla as the S&P 500's best performer so far this year.
The billionaire investor's hedge fund purchased 18 million shares of the TV, movie, and video-game company in the second quarter of 2022, Securities and Exchange Commission filings show.
Baupost bolstered its holdings to 29 million shares during the third quarter. It boosted them again to 31 million shares — a 1.3% stake — by the end of December.
Baupost's wager was worth $294 million at the year's end, when WBD was trading at $9.48 a share. The stock closed almost two-thirds higher at $15.62 on Tuesday, valuing Baupost's stake at $484 million (assuming Klarman and his team haven't touched the position this year.)
The Boston-based fund commanded a $6 billion US stock portfolio with only 34 holdings at the end of December, filings show. Only four of its positions — Liberty Global, Liberty Media, Qorvo, and Viasat — were worth over $500 million at the time. If Baupost hasn't pared its stake in WBD, the position likely ranks among its largest bets today.
WBD shares have jumped this year in part because of excitement around "Hogwarts: Legacy," a newly released video game set in the "Harry Potter" universe. Retail sales of the game topped $850 million in just the first two weeks after its launch, WBD CEO David Zaslav said on the company's recent fourth-quarter earnings call, according to a transcript provided by Sentieo/AlphaSense.
Klarman, a value investor who specializes in spotting and purchasing undervalued stocks, has been hailed as "the next Warren Buffett" by the legendary Berkshire Hathaway CEO himself.
Baupost declined a request for comment from Insider.