(Bloomberg) — Seth Klarman’s Baupost Group has laid off about 19% of its hedge fund investment team as part of a restructuring of its real estate and equity divisions, marking the biggest job cuts in the firm’s 42-year history.
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The move affects 11 of the 59 employees in the investment division, with the cuts split roughly evenly between the two businesses, according to a letter to investors sent Thursday and seen by Bloomberg.
The shift is part of a wider review of Baupost’s strategy which will see it focus more on real estate and equities and increase its exposure to distressed debt, special situations, event-driven equity, private betting and capital solutions.
“We expect this to be the most attractive investment location,” Klarman said in the letter.
The real estate team will focus on distressed capital structures, distressed loans and asset repositionings, areas the firm has invested broadly in until now, according to people familiar with the matter.When it comes to equities, Baupost decided it had too many analysts, the people said.
“Ultimately, we believe taking a more opportunistic approach to real estate will lead to the best outcomes,” Klarman wrote. “Our public offering team is focused on event-driven situations and value disruption.”
The company has already exited some long-standing positions and opened new ones, he added.
A representative for Boston-based Baupost, which had $23 billion under management as of December, declined to comment.
Equities currently make up 21% of Baupost’s portfolio, and real estate about 14%, some of the people said.
Baupost’s last major job cuts came in late 2020, when it closed its London office and laid off eight staff members.
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