Seth Klarman: Positioning His Portfolio for 2026
Sunday, January 4, 2026 · Johnny Hopkins
The latest 13F filing from Baupost Group offers a revealing snapshot of how Seth Klarman is positioning capital in the current environment. True to Baupost’s long-standing philosophy, the portfolio remains highly selective, concentrated, and fundamentally driven, with capital deployed into a small number of durable businesses where downside protection and long-term cash generation matter more than short-term narratives.
Unlike systematic or index-oriented managers, Baupost’s filing reflects deliberate, security-specific decisions, including several aggressive adds, a few notable trims, and full exits where the original margin of safety appears exhausted.
Below are the most important moves from Baupost’s latest filing — and what they suggest about Klarman’s thinking.
1. Restaurant Brands International (QSR): +4,203,300 shares
8,252,862 shares — $529.3M position (11.05% of portfolio)
Restaurant Brands is now Baupost’s largest disclosed equity holding, following a massive share increase of more than 100% quarter over quarter. This was the most decisive action in the portfolio.
The move suggests Klarman sees significant mispricing in QSR relative to its stable franchise model, recurring royalty cash flows, and long-term unit economics across Burger King, Tim Hortons, Popeyes, and Firehouse Subs. The scale of the increase indicates high conviction that near-term operational concerns are being over-discounted by the market.
This is classic Baupost: leaning hard into a durable business when sentiment is weak but intrinsic value remains intact.
2. Elevance Health (ELV): +703,000 shares
1,319,000 shares — $426.2M position (8.90%)
Baupost more than doubled its stake in Elevance Health, making it one of the fund’s largest healthcare exposures.
Managed care businesses like ELV fit squarely within Klarman’s wheelhouse: predictable cash flows, strong competitive moats, and essential services operating in a politically noisy but economically resilient sector. The sharp increase suggests Baupost believes recent cost pressure and regulatory concerns have created an attractive entry point for a high-quality compounder.
3. Union Pacific (UNP): +1,496,204 shares
1,496,204 shares — $353.7M position (7.38%)
Union Pacific is a newly established position, immediately sized as a top-five holding. The railroad industry’s high barriers to entry, pricing power, and long-term volume leverage make it a natural fit for a value-oriented investor focused on downside protection.
This move reflects confidence that rail assets — often misunderstood during economic slowdowns — offer inflation protection and durable returns on capital over a full cycle.
4. Alphabet (GOOG): −775,850 shares
1,858,138 shares — $452.6M position (9.45%)
Alphabet remains a core holding, but Baupost trimmed the position by nearly 30%.
The reduction likely reflects portfolio risk management rather than a loss of conviction. After strong performance and a higher weighting within the portfolio, trimming GOOG allows Baupost to recycle capital into higher-conviction ideas like QSR and ELV while still maintaining meaningful exposure to Alphabet’s dominant cash-generating businesses.
5. CRH plc (CRH): −442,000 shares
3,383,395 shares — $405.7M position (8.47%)
CRH remains a large holding despite a modest trim. The construction materials giant has benefited from infrastructure spending and pricing power, but Baupost appears to be right-sizing exposure after strong gains.
This reflects Klarman’s discipline: trimming positions when valuation approaches intrinsic value, even if the long-term thesis remains intact.
6. Full Exits This Quarter
Baupost exited several positions entirely, including:
- Viasat (VSAT)
- Liberty Broadband (LBRDK, LBRDA)
- ICON plc (ICLR)
- Amcor (AMCR)
These exits signal that Baupost believes the risk–reward balance has shifted, either due to valuation normalization, thesis impairment, or superior opportunities elsewhere. Klarman has long emphasized that selling is as important as buying — and these clean exits underscore that discipline.
Big Picture Takeaways
This was a conviction-driven quarter.
Capital was aggressively redeployed into a small number of high-confidence ideas, particularly QSR, ELV, and UNP.
Baupost leaned into real businesses, not themes.
Restaurants, railroads, healthcare, and materials dominate the top holdings — all sectors with tangible assets, pricing power, and cash-flow visibility.
Trimming is about risk, not regret.
Reductions in GOOG and CRH reflect portfolio balance and valuation discipline, not a bearish outlook.
Concentration remains intentional.
The top 10 positions represent over 75% of disclosed assets, reinforcing Baupost’s belief that diversification is protection against ignorance, not risk.
Klarman is playing defense with upside.
The portfolio emphasizes downside protection first, with upside driven by mean reversion and business durability rather than macro bets.