Seth Klarman, founder of the Baupost Group in 1982 and its leader ever since,
revealed the firms third-quarter holdings Nov. 14. Satellite maker ViaSat
(NASDAQ: VSAT ) was its third-largest holding with 10.5 million shares valued at
$350 million. Klarman now owns 24.9% of ViaSat. One of the best value investors
anywhere, Baupost first took a position in the second quarter of 2008. In the
span of three years, it has increased this position tenfold. As hard as it is to
bet against Klarman, Im recommending investors sell ViaSat and buy rival
communications and info-tech provider Harris Corp. (NYSE: HRS ) in its place.
Heres why. Good Company I first wrote about ViaSat in July 2010. At the time, I
concluded that the company, which sells satellite and wireless communications
and secure networking systems, didnt provide investors with growth at a
reasonable price. However, because Klarman was its biggest investor, I reasoned
that this genius sees an opportunity too big to be overly concerned about value.
ViaSat is a good company for sure, but since its trading at or near a 52-week
high and with a P/E ratio of 57.4 times this years earnings, investors
considering purchasing its stock at this time might want to think twice. Klarman
is a billionaire and can afford to wait for the opportunity he sees to arrive.
You likely cant. ViaSats revenues for the first two quarters of the year grew
7.2% to $418.1 million while operating income dropped 69.3% to $6.3 million. On
a non-GAAP basis, its earnings declined 12.7% to
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