An investor group that includes Seth Klarman’s Baupost Group LLC withdrew a proposal to build a rock quarry in Ontario after local residents opposed the plan.
The application for the quarry in Melancthon Township “does not have sufficient support from the community and government to justify proceeding with the approval process,” the Highland Cos. said in a statement on its website today. Highland’s backers for the aggregate quarry northwest of Toronto include Baupost, the Boston-based hedge fund, said Lindsay Broadhead, a spokeswoman for the company at Hill & Knowlton Strategies.
The decision is the latest setback for Klarman, a bargain hunter who along with other prominent value investors such as Ralph Whitworth of Relational Investors LLC and Jeremy Grantham of Grantham Mayo Van Otterloo & Co. has been hurt by the selloff (HPQ:US) in shares of Hewlett-Packard Co. The failure of the quarry project highlights the difficulties of investing in real assets, which have seen a surge in interest as central banks around the world print money to revive the economy.
Baupost, founded in 1983, manages about $25 billion. As of July, the hedge fund had returned 18 percent a year since inception.
Elaine Mann, a Baupost spokeswoman, said the firm declined to comment on the project.
Klarman, 55, wrote the preface to the sixth edition of “Security Analysis,” the 1934 book by Benjamin Graham and David Dodd considered by many the bible of value investing. He was among a number of prominent managers who last year bought shares in Hewlett-Packard (HPQ:US), the Palo Alto, California-based technology firm that has slumped 53 percent in 2012.
Hewlett-Packard plunged 12 percent yesterday after the company took an $8.8 billion writedown, citing a “willful effort to mislead investors and potential buyers,” at Autonomy Corp., the British software maker it bought last year for $10.3 billion. Hewlett-Packard is the third-worst performer in the Standard & Poor’s 500 Index, according to data compiled by Bloomberg, as only education company Apollo Group Inc. (APOL:US) and Advanced Micro Devices Inc. (AMD:US) have fallen more.
Klarman purchased 20.8 million Hewlett-Packard shares (HPQ:US) in the third quarter of 2011 when the stock sold for an average of $29.48 a share, according to data compiled by Bloomberg. He added to his holdings in this year’s second quarter before dumping almost half his stake in the third quarter, when shares sold for an average of $18.40.
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