Seth Klarman

CEO & Portfolio Manager, Baupost Group

Power Of Investing Seth Klarman, founder of Baupost Group, built it from $27 million to $22 billion

📅 Jun 27, 2026 Dust of Ages 67 MIN 2 VIEWS 67 SEGMENTS · 2 SPEAKERS

Seth Klarman, founder of Baupost Group, built it from $27 million into $22 billion - and his secret weapon is doing nothing for years at a time his book "Margin of Safety" is out of print and sells used for over $1,000 he almost never talks in public he just did - in one of the rarest interviews of his career 75-min on how the Oracle of Boston actually thinks about risk bookmark & watch today

What Seth Klarman said

Written from the verified transcript and checked against it. Every figure links to the moment it was said.

Seth Klarman discussed his early interest in investing, starting with a Johnson & Johnson share at age 10, and his path to leading Baupost Group, which he built from $27 million to $22 billion. He emphasized a bottom-up, value-oriented approach, studying history, and learning from Graham and Buffett. He detailed Baupost's 2008 crisis response, raising $4 billion and deploying $100 million daily into distressed assets. Klarman explained his cash management strategy, holding up to 30% cash historically, and his opportunistic allocation across equities, distressed debt, real estate, and private investments. He highlighted current opportunities in assisted living and certain office markets, while expressing nervousness about an inflationary boom and AI-driven market dispersion. He criticized the Fed's prolonged zero rates, discussed the SpaceX IPO as a potential market top signal, and shared his views on philanthropy, mentors, and advice for young investors.

Key takeaways

Baupost raised $4 billion and deployed $100 million a day into distressed assets during the 2008 crisis.
Klarman sees opportunities in assisted living and select office markets, citing aging population and pent-up rent growth.
He called the SpaceX IPO a 'bell that might ring at the top,' citing unprofitability and massive supply of stock.
Klarman criticized the Fed for keeping rates at zero for a decade, stoking speculation that blew up in 2022.
He holds up to 30% cash historically but has increased equity liquidity to reduce cash drag.

Numbers and commitments

Figure	What it refers to	Type	At
$22 billion	Current assets under management at Baupost	metric	33:40
$4 billion	Capital raised during 2008 crisis	metric	19:13
$100 million a day	Daily deployment into distressed assets during 2008	metric	19:13
30%	Maximum cash position historically held	metric	28:53
70	Price of bonds bought during 2008 crisis, worth par	price	19:44
100x	Goldman's estimate of required growth in SpaceX business to justify price	other	44:31
10 or 15%	Share of some endowments' total endowment in SpaceX	metric	44:31

Chapters

0:00Early life and first stock
3:16Baupost origin and leadership
6:55Investment philosophy and influences
13:03Writing Margin of Safety
19:132008 crisis response
28:23Cash management and allocation
33:40Current opportunities in real estate and private investments
40:05AI and market environment
43:41SpaceX IPO and market supply
50:14Fed policy and speculation

Questions asked in this interview

0:00What was the original career plan?
8:06How did that environment affect you as an investor? What lessons did you take?
13:03Less than a decade after starting, you published 'Margin of Safety' at 34. What led to that?
19:13During the 2008 crisis, you raised $4 billion and deployed $100 million a day into distressed assets. Are those numbers right?
22:32Was it just the value framework?
28:23Cash is an important part of your toolkit. What optionality does it create?
38:14How do you prevent something that's cheap from suckering you into something that's on the way to becoming much much cheaper?
43:41I know the old line is they don't ring a bell at the top, but at a certain point, how do you perceive something like this? Does it trouble you?
52:58What do you like in sports these days?
56:33And why be a little more public these days?
1:01:18Starting with, who are your mentors who helped shape your career?
1:03:42What are you listening to or what are you watching and streaming these days?

Barry 0:00 ↗

Thank you so much. I've been looking forward to this forever. Before we get into your investment philosophy and the development of Baupost, I have to roll back to your early days. Economics from Cornell, an MBA from Harvard. What was the original career plan?

Seth Klarman 0:23 ↗

I was always drawn to investing from a very young age, interested in baseball stats and stock tables. I had small businesses like newspaper routes and a snow cone stand. I bought my first stock at 10 with bar mitzvah money. I'm drawn to puzzles, and the stock market is a big puzzle.

Barry 2:56 ↗

Well, it couldn't have been bar mitzvah money if...

Seth Klarman 2:58 ↗

It wasn't bar mitzvah money then, it was a present, but bar mitzvah money continued to be piled in.

Barry 3:04 ↗

10 years old and...

Seth Klarman 3:05 ↗

I bought a share of Johnson & Johnson.

Barry 3:07 ↗

Still have it?

Seth Klarman 3:08 ↗

I don't still have it. It split three-for-one, but I traded it for something else.

Barry 3:16 ↗

Let's fast forward to the Baupost origin story. You're 25, brought in to manage money for four founding families. At 25, that's shocking.

Seth Klarman 3:44 ↗

I agree. I didn't start the firm. The founders wanted to build an institutional structure in the early 80s, a fraught time. I was a student; the job was to join and figure out smart things to do with the money.

Eventually I became lead partner. I wasn't CEO for the first seven years, then became CEO through a handshake deal. I ended up with over half the firm.

Barry 6:08 ↗

Ended up with over half. That's amazing.

Seth Klarman 6:12 ↗

Now much less because I share with my team.

Barry 6:17 ↗

Makes sense. Let's talk about the timing. 1982 was the start of a historic bull market after stagflation. How did that affect your thinking about risk and opportunities?

Seth Klarman 6:55 ↗

You didn't know it was the start of a bull market. It felt uncertain. We focused on bottom-up mispricings, not the market. Our approach would have worked in any direction.

Barry 8:06 ↗

How did that environment affect you as an investor? What lessons did you take?

Seth Klarman 8:38 ↗

Every investor must study history. Understand worst moments like the Great Depression. Even Graham nearly went broke. Value investors make money staying bottom-up. If you have stress-tested bargains, you'll likely do okay.

Barry 10:40 ↗

You mentioned Graham. Who else influenced your philosophy?

Seth Klarman 10:57 ↗

Graham and Buffett. Graham's focus on downside risk and bottom-up. Buffett's willingness to hold cash and compound over time. That north star lets you ignore the herd and follow value.

Barry 13:03 ↗

Less than a decade after starting, you published 'Margin of Safety' at 34. What led to that?

Seth Klarman 13:35 ↗

A classmate asked me to write it. I thought I was updating 'The Intelligent Investor' for modern times. The book initially had little support from the publisher and developed a cult following after going out of print.

Barry 14:51 ↗

Did people respond initially?

Seth Klarman 15:09 ↗

It landed with a thud, but competitors used it to train teams. It gained a cult following because it wasn't republished.

Barry 16:40 ↗

In 2023, you edited the seventh edition of 'Security Analysis'. How different is it?

Seth Klarman 17:07 ↗

We didn't change Graham's text; we added commentaries from modern experts. We expanded coverage of international investing, private investments, and modern market structures to keep it relevant.

Barry 19:13 ↗

During the 2008 crisis, you raised $4 billion and deployed $100 million a day into distressed assets. Are those numbers right?

Seth Klarman 19:44 ↗

Roughly. We were closed to new clients but opened when markets fell. The team raised significant capital within a quarter. We bought bonds at 70 we thought were worth par, stress-testing every investment.

Barry 21:16 ↗

How did you put the team together?

Seth Klarman 21:34 ↗

We already had a team in place with deep expertise. People are versatile and cross-trained across groups.

Barry 22:32 ↗

Was it just the value framework?

Seth Klarman 22:48 ↗

It was the same cerebral, bottom-up work. We bought mortgage and corporate debt. The key is to have capacity to buy when others are sidelined.

Barry 25:35 ↗

How do you reconcile bottom-up with the top-down panic that created distressed assets?

Seth Klarman 26:08 ↗

Like mountain climbing: bottom-up for the trail and equipment, top-down for the weather. You need an eye on macro, but don't invest based on it. Notice bottom-up mispricings, then explore that market.

33 more exchanges in this transcript

Cite this transcript

APA, MLA, BibTeX

APA

Klarman, S. (2026, June 27). Power Of Investing Seth Klarman, founder of Baupost Group, built it from $27 million to $22 billion [Interview transcript]. Dust of Ages. CEOInterviews.AI. https://ceointerviews.ai/interview/1055527/

MLA

Seth Klarman. "Power Of Investing Seth Klarman, founder of Baupost Group, built it from $27 million to $22 billion." Dust of Ages, 27 Jun. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/1055527/.

BibTeX

@misc{klarman2026_1055527,
  author       = {Seth Klarman},
  title        = {Power Of Investing Seth Klarman, founder of Baupost Group, built it from $27 million to $22 billion},
  howpublished = {Interview transcript, Dust of Ages. CEOInterviews.AI},
  year         = {2026},
  month        = {jun},
  url          = {https://ceointerviews.ai/interview/1055527/},
  note         = {Speaker-attributed transcript with timestamps}
}

▶

Key Quotes (2)

“I think investors might be missing just how much money is being sucked out of the system between large IPOs. This won't be the last one. Open AI and anthropic are coming and there's a ton of other IPOs that are stuck in institutional investors portfolios that also they'd love if they could get them off at any point. ... There's so much demand for money and I think we're in a vulnerable place where”

▶ 45:21 POLICY

“I think that the Fed took rates down to zero after the great financial crisis and that it was really the only way to hold things together, give time to heal. But by leaving rates there for an extra decade after there was no crisis, I think we stoked a problem. We sort of incented speculation and maybe disincentivized responsibility.”

▶ 50:59 CONTROVERSIAL POLICY

Mentioned in this interview

Johnson & Johnson JNJ: First stock bought at age 10, split three-for-one, later traded.

Graham: Influenced focus on downside risk and bottom-up investing.

Buffett: Influenced willingness to hold cash and compound over time.

Max Heine: Mentor at Mutual Shares, early career influence.

Michael Price: Mentor at Mutual Shares, early career influence.

SpaceX: IPO seen as potential market top, unprofitable, huge valuation.

OpenAI None-OpenAI: Upcoming IPO, part of supply of securities.

Anthropic None-Anthropic: Upcoming IPO, part of supply of securities.

Earlier, on the same topics

“I think our favorite single idea is in the commercial real estate space. It's assisted living, which has gone through a horrible time since Covid and a lot of bankruptcies in the area because those newly built assisted living centers couldn't get occupied, nobody would put their relatives in them. A”

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About Seth Klarman

Seth Klarman, CEO of Baupost Group, gave a series of rare public interviews in 2026, including a 75-minute conversation with Barry Ritholtz on Bloomberg. Klarman discussed the firm's multi-strategy approach, which he said evolved opportunistically from public equities into distressed credit, private investments, and real estate. He described Baupost's team as generalists who work across asset classes and emphasized the firm's patience, stating that sometimes there is nothing to do and other times there is an avalanche of opportunity. Klarman also said he regretted not having a deeper understanding of venture capital earlier in his career. Regarding the current market, Klarman stated that he believes the environment has characteristics of a bubble, citing an optimistic tone around AI and examples such as a shoe company adding AI to its name and seeing its stock rise. He said Baupost is focusing on "AI agnostic" investments, such as credit markets and infrastructure, where he sees less competition. Klarman also expressed concern about the U.S. national debt reaching 100% of GDP and said he believes the country is taken less seriously overseas due to policy volatility. He identified assisted living commercial real estate as Baupost's favorite single idea, noting the sector is beginning to recover from post-COVID difficulties.

All Seth Klarman appearances → Dust of Ages on YouTube →