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After expanding his position in Translate Bio Inc. (NASDAQ:TBIO) at the end of August, Baupost Group leader Seth Klarman (Trades, Portfolio) disclosed on Friday that he boosted the stake another 42.96%.
The guru's Boston-based hedge fund, which manages about $24.7 billion in assets, searches for value among a broad range of opportunities, including stocks, distressed debt, liquidations and foreign securities. With a long-term horizon, the renowned investor typically seeks securities trading well below his estimate of intrinsic value and waits for their price to rise.
According to GuruFocus Real-Time Picks, a feature that is part of Premium service, Klarman invested in 5.3 million shares of Translate Bio on Sept. 18, bringing his total holding to 17.5 million shares. The stake now represents 1.63% of the equity portfolio. The stock traded for an average price of $10.01 per share.
GuruFocus data indicates the guru has lost an estimated 2.18% on the investment since establishing it in the second quarter of 2018.
The Lexington, Massachusetts-based clinical-stage biotechnology company, which focuses on developing messenger RNA therapeutics to treat diseases caused by protein or gene dysfunctions, has a $514.19 million market cap; its shares were trading around $10.08 on Monday with a price-book ratio of 3.93 and a price-sales ratio of 114.55.
After tumbling approximately 35% in 2018, GuruFocus estimates the stock has gained 36% year to date.
On Sept. 17, the company announced an underwritten public offering of 9 million shares, which were priced at $10 per share. In addition, underwriters were granted a 30-day option of purchasing up to an additional 1.35 million shares. The offering closed on Sept. 20.
Translate Bio's financial strength was rated 4.3 out of 10 by GuruFocus. Despite having comfortable interest coverage and a solid cash-debt ratio of 11.46, the low Altman Z-Score of -0.46 warns the company could be in danger of going bankrupt.
The company's profitability and growth fared much better, scoring a 10 out of 10 rating despite having negative margins and returns that underperform a majority of competitors.
With 34.39% of outstanding shares, Klarman is by far Transate Bio's largest guru shareholder. Jim Simons' (Trades, Portfolio) Renaissance Technologies also owns the stock.
Portfolio composition
Klarman's $10.73 billion equity portfolio, which was composed of 30 stocks as of the end of the second quarter, is largely invested in the consumer cyclical and health care sectors, followed by a smaller position in the technology space.