Bill Cohan, Columnist

Seth Klarman Says Markets Are Too Bubbly

Very few hedge-fund managers are as widely and consistently acclaimed as Seth Klarman, the 56-year-old founder of the Boston-based Baupost Group.

March 26, 2014 at 1:17 PM UTC

By Bill Cohan

William D. Cohan, a Bloomberg View columnist, is the author of the forthcoming "The Price of Silence: The Duke Lacrosse Scandal, the Power of the Elite and the Corruption of Our Great Universities," as well as "Money and Power: How Goldman Sachs Came to Rule the World" and the New York Times best-sellers "House of Cards" and "The Last Tycoons." Cohan is a contributing editor at Vanity Fair and writes frequently for the Financial Times, Fortune, the Atlantic and the Washington Post. He worked on Wall Street as a senior mergers and acquisitions banker for 15 years. He also worked for two years at GE Capital. Cohan is a graduate of Duke University, Columbia University School of Journalism and Columbia University Graduate School of Business. "The Last Tycoons" won the 2007 Financial Times/Goldman Sachs Business Book of the Year Award.

Seth Klarman thinks the stock market these days is akin to a Rorschach test. What does he see? Photographer: Daniel Acker/Bloomberg — Seth Klarman thinks the stock market these days is akin to a Rorschach test. What does he see? Photographer: Daniel Acker/Bloomberg

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When Seth Klarman speaks, listen carefully.

Very few hedge-fund managers are as widely and consistently acclaimed as is Klarman, the 56-year-old founder of the Boston-based Baupost Group. The fund has about $27 billion in assets under management -- after returning $4 billion to investors last year. In 2012, LCH Investments NV listed Baupost as the fourth-most successful fund in investment performance. In 2013, Klarman told his investors that he earned them a mid-teens net return, despite having almost half of his portfolio in cash. That's impressive.