My publication of the 2016 Baupost Group Annual Letter was taken down. I wasn’t supposed to published it, as clearly stated at the bottom of every page in the letter. I felt a little guilty publishing it. At the same time I felt like I was doing the right thing. Let me explain.
In the letter, Seth Klarman, the legendary value investor running Baupost, stated that the letter is addressed to the limited partners only (his investors). However, after reading the letter, which is available all over the Internet, it’s clear that he wrote it for a larger audience. It’s obvious by the content of the letter that he expected non-investors and the media to study and analyze every line. He wanted people to read it. A good portion of the letter is on Trump. Klarman warn us about a Trump presidency. He knew his thoughts would end up in the New-York Times and Wall-Street Journal. You don’t write that kind of stuff without expecting it to go public. His shareholder letters are not like reading a personal email he sent to somebody. Publishing something like that would clearly be in violation of privacy and other rights.
I also think he didn’t make his letter public on purpose. Seth Klarman obviously understands basic psychology; as soon you can’t have something you create a desire for it. If he didn’t understand that he wouldn’t be the legend he is at investing. Since “you are not supposed” to read his letter, now you want to read it. Just like his book, Margin of Safety, one of the most sought after value investing book, was never reprinted and now sells for over $1,500 a copy (Imagine the price crash if a reprint is ordered). He knew that his letter was going to be leaked. His letter are up there with Warren Buffett’s annual letters. Imagine if Buffett didn’t make his shareholder letters public, it would become of the most pirated document ever.
Why did I think I was doing the right thing? In his letter he share his thoughts on the current state of the market and investment philosophy. You can learn a lot and will make you a better investor. Again, that’s something Klarman intended to accomplished since he is one of the most successful and influential investor.
As mentioned his letter got taken down on this blog. But somehow, the New-York Times among others, published large section of the letter in numerous posts and it’s legal. I guess they know the legal tricks to get around the “ban”. From what I understand, if I copy and paste sections of the letter, it’s fine, but if I publish the document (the source), it’s wrong. Not sure how that makes it legal. So don’t take my legal advice. Anyway, people who want to read his letter will find it and read it.
Baupost Group has a reputation for being extremely private. I like that and I respect that. But it’s also strategic. Klarman has long kept a low public profile. But when he comes out in the media, it creates an impact. People listen because it’s a rare event.