Baupost’s Seth Klarman is one of the legendary investors of today, so when he identifies the areas of the markets where he sees the greatest opportunities, the Street perks up its proverbial ears. In an interview with CNBC’s Sara Eisen at the 2026 Global Alts New York, Klarman also talked about his definition of value investing and how value investors should play the growth-oriented AI theme.
Klarman’s definition of value investing
As a value investor, Klarman continues to invest in the AI theme despite it being more growth oriented. Eisen asked him what value investors are to do when AI is the prominent theme currently.
“I think that there’s a temptation by a lot of people, and especially by academics, to think of value as cheap paint-by-numbers: the lowest multiple stocks,” Klarman said, “We’ve realized really at the beginning of Baupost that that’s not the right definition. The right definition is to think about what’s a business worth. Obviously, a growing business is worth more than a stagnant business. I think that the melting ice cubes of today’s businesses are melting faster than ever, that if you’ve got a business problem, you may be eroding really quickly.”
Baupost avoids such companies, and Klarman said they don’t care if a company is trading at 4x cash flow because that won’t ultimately have value they can get their hands around. Instead, their value approach involves thinking about what we can know for sure, especially at such an exhilarating time as this one, when investors are thinking many years out.
When multiples do matter
Klarman explained that when paying 40x multiples or even, in some cases, “infinite” multiples, he needs some degree of conviction about a very distant future. However, he doesn’t see how that’s possible. Klarman noted that we don’t know what’s going to happen to AI. We don’t know what it means for the economy, employment or inflation.
Login required to continue reading.
Setup a free account to get access to this article (no credit card required).
View Full Article
