Need to Know: Legendary investor Seth Klarman just got back into Amazon and bought three other stocks

“The one I’m guilty of the most … is when you’ve stayed with a position a long time and you still believe in the thesis but you’re starting to grow a little skeptical about ‘Will it ever work?’ I think that the human tendency that I have that I shouldn’t have is to feel like … and this isn’t how I experience it but … maybe it owes you something. Maybe you’ll be a schmuck if you sell it now. You’ve waited all this time, you’ve paid your dues, it owes you. Stocks never owe you,” says Klarman, whose firm through the end of last year generated the eighth most gains of any hedge fund all-time, according to data compiled by LCH Investments.

He might be kicking himself if he applied that thinking to Lithia Motors
LAD,
+2.99%,
a big automobile dealer that he sold sometime between April and the end of June when it was bumbling along, only to see the company now up 55% this year.

But probably the most interesting element in the new 13-F released after Friday’s closing bell are his buys, which include Amazon.com
AMZN,
-0.11%,
a stock that was a top-20 position in his portfolio last year when he pounced on beaten-up tech stocks. After selling Amazon in the first quarter, he got back in.

At 91 times forecast current-quarter earnings, Amazon might not screen as a value stock, but it’s been a profitable trade no matter at which point the internet retailer and cloud-services provider was purchased in the second quarter. Amazon obviously has been a long-term success, and in the second quarter it demonstrated how a cost-efficiency drive could quickly boost its profits.

Baupost’s other three new positions are Dollar General, Union Pacific and CRH. Dollar General
DG,
-1.33%
trades at 16 times earnings and on several metrics is more affordable than rival Dollar Tree
DLTR,
-0.92%.
Then again, store traffic was down by a double-digit percentage in the second quarter, according to data from Citi. The discounter reports second-quarter results on Aug. 31.

Union Pacific
UNP,
-0.35%
turned out to be another trade that quickly made a profit, as the stock shot up in late July on the naming of a new chief executive, even as earnings and revenue missed analyst estimates. Similar to Dollar General, Union Pacific is suffering from negative volume traffic growth, so the company’s prospects will turn on its ability to improve efficiency.

CRH
CRH,
-0.51%
is an Irish-headquartered building-materials supplier that makes three-quarters of its earnings from the U.S. and is moving its primary stock-market listing to the New York Stock Exchange. It is considerably cheaper than U.S.-listed peers Martin Marietta Materials and Vulcan Materials.

The markets

U.S. stock futures
ES00,
+0.12%

NQ00,
+0.16%
advanced, after the S&P 500
SPX
declined by 0.3% last week, its second decline in a row. The yield on the 10-year Treasury
BX:TMUBMUSD10Y
was 4.16%.

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The buzz

AMC Entertainment shares
AMC,
+5.62%
tumbled after a court approved the conversion of the APE
APE,
+1.71%
preference shares.

Tesla
TSLA,
-1.10%
cut prices for some of its Model Y versions in China, as that market’s EV war heats up.

U.S. Steel
X,
+0.98%
rejected a $7.3 billion bid from Cleveland-Cliffs
CLF,
-0.07%.

Exor took a 15% stake in Royal Philips
PHG,
-1.17%,
the struggling Dutch health technology provider.

Mastercard
MA,
-0.54%
took a minority stake in the fintech unit of South African telecom MTN at a $5.2 billion valuation.

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