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In Rare Loss, Seth Klarman Dumps Nearly Half Hewlett Packard Holdings

Tyler Durden's picture





 

The first 13-Fs are rolling in and among them, that of iconic hedge fund Baupost and its legendary head Seth Klarman. Legendary because until now he was largely percevied as unable to lose on a trade. Ever. And then Hewlett Packard came: Klarman decided the stock was a value play just over a year ago, when he disclosed that as of September 30, 2011 he had accumulated an over 20 million share position when the HPQ price was over $20/share. The holding had gradually declined until Q1 2012, then hear nearly doubled down to a total of 27 million shares. Then the stock collapsed. And like not only a good investor, but trader, Klarman decided to book a loss and dump nearly half his HPQ position, holding just over 14 million shares as of September 30, a stake we are confident is likely zero by now. There goes the bull "alphaclone" case for the company that is not "off its lows."

 


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Tue, 11/13/2012 - 18:08 | Link to Comment ghostfaceinvestah
ghostfaceinvestah's picture

Can we please get an update from Manal Mehta on his long MBI/short BAC trade?

Tue, 11/13/2012 - 18:14 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Bill Hewlett & Dave Packard are rolling in their graves, watching Meg Whitman drive the final nail into the coffin of what was at one time the brilliant business they struggled to build, as their lives' mission.

Hewlett-Packard = Xerox

Tue, 11/13/2012 - 19:38 | Link to Comment Larry Dallas
Larry Dallas's picture

With all due respect, I do believe Carly Fiorina was the one who bastardized the business with the Compaq purchase and other endeavors to dilute the franchise.

I'll never buy an HP anything. Their printers were not functional. Flatbeds with no feeder mechanism were available until way after others had them.

Inks that cost 3x the competition. Drums that burnout quickly. Awful product.

Tue, 11/13/2012 - 19:42 | Link to Comment blunderdog
blunderdog's picture

Come on, don't be mean to Carly. 

Everyone knows if your tech-stock price is sliding, the best thing in the world to do is fire all the overpaid smart-guys wasting money on R&D...

Tue, 11/13/2012 - 20:19 | Link to Comment Galactic Superwave
Galactic Superwave's picture

As someone who worked there for more than 20 years and have even talked with Bill and Dave, Carly was absolutely the biggest reason for the beginning of HP's spiral downward. Most of the middle management and down knew she was a big windbag that had no inkling what a tech company needed to do to innovate quickly. But, the Board of Directors should also take a huge part of the blame. They have consistently picked crap CEO's since then and their own ranks stink with corruption.

Tue, 11/13/2012 - 21:55 | Link to Comment sumo
sumo's picture

In my electrical engineering and R&D days, HP was THE band to buy in test equipment, with Fluke and Tektronix close behind, but behind nevertheless.

There is a thriving market for used HP gear that is decades old. Check out Ebay. HP test engineers were world-class.

PCs are another story.

Tue, 11/20/2012 - 22:31 | Link to Comment rajonmestra
rajonmestra's picture

Well I have to admit that HP does sometimes not work when you really need it to work. It is so frustrating like what I read from: ink HP but there are advantages of having HP as a printer. Well it being cheap is really handy and also it is user friendly as well. I seem to stilll support HP printer products.

Wed, 11/14/2012 - 03:37 | Link to Comment wahrheit
wahrheit's picture

If it's of any interest, Meg Whitman was born and raised in Cold Spring Harbor, NY.  Just a coincidence, I'm sure.

Tue, 11/13/2012 - 18:13 | Link to Comment Tyler Durden
Tyler Durden's picture

No need for others to chime in: get ready for a tender bidding war for the bonds, with MBIA shareholders, already crossholders (and likely with more than a blocking stake), competing with BAC on the highest tender price. Only problem is BAC management may have problems convincing its shareholders it is engaged in "pointless" auctions over a matter which it designated as immaterial in its latest earnings call.

Finally, as to the timing of an enforced settlement, a ruling may and will come well within the going concern period.

Tue, 11/13/2012 - 19:31 | Link to Comment Midas
Midas's picture

I'd make fun of Seth, but HPQ was my big loser of the year also.  I say Meg for governess just to get her out of the offices of HP.

Tue, 11/13/2012 - 23:21 | Link to Comment Schmuck Raker
Schmuck Raker's picture

Can I get some help here?

"....within the going concern period."

What are the adults(Tylers) talking about, please?

What is the relation to the tender expiration? Is there one?

Are we talking about anytime before BK becomes necessary?

I'm so confuuused.

TIA

Tue, 11/13/2012 - 18:20 | Link to Comment Dr. Engali
Dr. Engali's picture

Another giant company following Eastman Kodak to the trash heap of history. There should have been a few more banks and a couple car companies joining them..... In due time.

Tue, 11/13/2012 - 18:19 | Link to Comment Yen Cross
Yen Cross's picture

 FUCK the CLOuD! Long live H/P and hard drives!

Tue, 11/13/2012 - 19:20 | Link to Comment rtalcott
rtalcott's picture

Long live Agilent (and the memory of Bill & Dave)...fuck what is now hp....

 

Tue, 11/13/2012 - 19:20 | Link to Comment greensnacks
greensnacks's picture

Long live hard drives, but avoid HPs and Dells.

http://www.gartner.com/it/page.jsp?id=2220715

 

 

Tue, 11/13/2012 - 18:20 | Link to Comment Seasmoke
Seasmoke's picture

Even his race horses have sucked lately.....

Tue, 11/13/2012 - 18:50 | Link to Comment rodocostarica
rodocostarica's picture

Looks like he came in at second place in $ winnings at the Saratoga meet. I would be happy to be in 50th place there myself.

 

http://www.nyra.com/Saratoga/Handicapping/Statistics/LeadingOwners.pdf

 

Klarman = Klaravich stables

Tue, 11/13/2012 - 18:30 | Link to Comment Omen IV
Omen IV's picture

he should take his free cash and double down on  JCP - same profile as HP - im sure ackerman would accommodate him

Tue, 11/13/2012 - 18:35 | Link to Comment narmbs
narmbs's picture

The thing about Klarman is we have no idea what else he held in his short, credit or derivative book. I agree he probably was playing this as a long only bet, but you never know looking at these 13-Fs if the trade was paired with something else.

Tue, 11/13/2012 - 18:44 | Link to Comment Yen Cross
Yen Cross's picture

 He obviously, has/had some( proprietary) "calls or warrants" that reached the [exercise date]?

I'm guessing this paper was 3-5 years old, based on the cashout value.

 Am I wrong?

Tue, 11/13/2012 - 18:38 | Link to Comment TahoeBilly2012
TahoeBilly2012's picture

Is it my fault my home computer still runs Win XP? Best OP system EVER! Paid for too!

Tue, 11/13/2012 - 18:44 | Link to Comment Downtoolong
Downtoolong's picture

Does this mean that eBay's early success was more about eBay and less about Meg Whitman being the undeniable queen of business acumen, like she was so often championed to be in the MSM?

A true champion can repeat their performance. She hasn't had a winner since, including her bid for the Governor's slot.

 

 

Tue, 11/13/2012 - 18:46 | Link to Comment Bangin7GramRocks
Bangin7GramRocks's picture

So, it appears to be harder for these patriotic chums to produce returns after their network of arch-criminal insider info stooges has been disbanded. If it seems too good to be true........it probably is!
We should cut their 15% tax rate to 10 or even 5 now that it is harder for them to "earn".

Tue, 11/13/2012 - 18:56 | Link to Comment cxl9
cxl9's picture

I guess HP should have just stuck to making LaserJet 4 printers until the bitter end, instead of the commodity Chinese junk they sell today. Oh yeah, and "services".

Tue, 11/13/2012 - 19:47 | Link to Comment blunderdog
blunderdog's picture

I'd be thrilled if I could buy a 13 year-old 4050 today, as opposed to one of the current wireless touchscreen web-enabled color inkjet shitboxes.

Tue, 11/13/2012 - 19:02 | Link to Comment TWSceptic
TWSceptic's picture

HP is dying because it stopped innovating, and this didn't help either: http://gizmodo.com/5406415/laptop-reliability-study-asus-and-toshiba-com...

 

Also their servers are too expensive, I got a Dell server for hosting my site instead for a fraction of the price and it has been running great for 4 years already without a single hardware issue. Try that with HP. My HP laser printer has been decent but it's not the best anymore either.

Tue, 11/13/2012 - 21:08 | Link to Comment QQQBall
QQQBall's picture

HP is dying because it stopped make great printers. Buying cartridges for the color laser is like a black hole.

Tue, 11/13/2012 - 18:57 | Link to Comment Bam_Man
Bam_Man's picture

Klarman evidently noticed that this is a company that cannot turn a profit selling $25 ink cartridges that need to be replaced every two weeks. FAIL.

Tue, 11/13/2012 - 19:05 | Link to Comment piceridu
piceridu's picture

The most expensive liquid on earth is in an ink jet cartridge...go figure...

Tue, 11/13/2012 - 19:02 | Link to Comment Hedgetard55
Hedgetard55's picture

Insider info dried up. Water reached it's natural level.

Tue, 11/13/2012 - 20:01 | Link to Comment bankonzhongguo
bankonzhongguo's picture

HP profit is selling ink to idiot consumers at $64,000/gallon.

Nearly everything else is outsourced via someone else's patents.

The last 4 laptops across my family with an HP logo all failed within 18 months due to cheap solder on their graphics cards and horrific support and warranty "care."

Die Monster Die!

Wed, 11/14/2012 - 03:35 | Link to Comment SoCalBusted
SoCalBusted's picture

Sounds like they have improved quality.  Five years ago we had two fail just a few hours out of the box.  I knew then they were doomed and advised everyone that would ask to not buy HP computers.

Tue, 11/13/2012 - 21:00 | Link to Comment ebworthen
ebworthen's picture

That damn obnoxious as Hell commercial of theirs lately about "It ain't what you do, it's the way that you do it" is enough reason to sell the stock.

Printers mean a paper record that can't be erased; why do you think the financial industry wants you to accept electronic statements?  "Poof!  And...it's gone!".  Exactly. 

No future there for HP because the Millenial's and the A.O. (Always On) generation think it's just great.  Those poor youngsters will be like Jews on the train to Auschwitz before they realize how they are being screwed.

The P.C. is dead, the desktop is dead, HP has to go to all server/all terminal or give up the ghost now.

Same for Dell and Lenovo and Apple.  Yes, Apple.  Everything is going mobile and/or to the flat screen and the cloud.

Wed, 11/14/2012 - 03:40 | Link to Comment wahrheit
wahrheit's picture

They are trying; heavily investing in their enterprise security and Openstack cloud offerings indicate that they are not completely dead but it remains to be seen if they can ditch their h1b culture crippling and make shit happen.

Tue, 11/13/2012 - 22:07 | Link to Comment mogul rider
mogul rider's picture

They let women run the fucking company. The rest is history or will be.

 

 

 

 

Tue, 11/13/2012 - 22:34 | Link to Comment ThisIsBob
ThisIsBob's picture

Yahoo to that.

Tue, 11/13/2012 - 22:21 | Link to Comment Paracelsus
Paracelsus's picture

I worked at Agilent overseas for two years around the time of the Dotcom crash. The company mandated a 10% salary cut for staff worldwide. So the staff go "Ok,I'll just work 10% fewer hours". Na,na,na goes management,that wasn't the way it should work.Yes, most staff hated the Compaq deal and Ms. Fiorina.Fact is,people love their company if it is well run,and the word gets around much like google,and all the other high tech names.Running a great company into the ground is very demoralizing to watch at the dept. level. Soon the smart cookies are leaving for greener pastures.This is called an exodus of talent and is a phenomenon not without long-term consequences . Also as with any company when the long-haul employees cash in their chips you will hear someone yell,"we got a fifty year old sig gen came in,where's old Bill at?"  

 

Wed, 11/14/2012 - 03:38 | Link to Comment SoCalBusted
SoCalBusted's picture

"Bill" is in India now and doesn't know what the fuck you are talking about, but can connect you to Sales so you can buy a new signal generator.

Wed, 11/14/2012 - 07:07 | Link to Comment StychoKiller
StychoKiller's picture

I have in my possession:

Hp-85A (computer/instrument controller) -- refurbished by LATech

Hp1631D Logic Analyzer

Hp3478A DVM (Digital Voltmeter)

Hp59401 GPIB Bus Analyzer

All of them are obsolete, yet in perfect working order.

Tue, 11/13/2012 - 22:33 | Link to Comment ThisIsBob
ThisIsBob's picture

Seth, I don't know you and you don't know me.  Meg.

Wed, 11/14/2012 - 08:10 | Link to Comment Mitch Comestein
Mitch Comestein's picture

Next major resistence line is at around $10 set in 1994.  There is nothing stopping it from hitting that number. Timberrrrrrrrrrrrrrrrrrrrrrrrrrrr.

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