Seth Klarman is considered one of the world’s money managing impresarios, a superb value investor whose record of outsized returns has given him cult status on Wall Street.
What interests him now might be a surprise: rocks and spuds in a rural Ontario backwater.
While typical hedge funds flip stocks, commodities, and complex financial derivatives, Mr. Klarman’s Baupost Group has taken a position that is more down to earth, literally. It’s invested in Highland Companies, Ontario’s largest potato grower, which recently proposed developing a mega quarry on part of its sprawling spud lands.
Potatoes and gravel seem like far-out investment ideas, even for a U.S. hedge fund, and Mr. Klarman’s taking a shine to them suggests they may have upside potential currently not appreciated by the market.
The trade is likely to either cement Mr. Klarman’s reputation for acumen, or be a big flop.
On the side of acumen are some intriguing numbers. Baupost was part of a group funding Highland’s purchase of about $50-million worth of potato lands in Dufferin County in Southwestern Ontario, under which, at a relatively shallow depth of about six metres, lie an estimated one billion tonnes of limestone suitable for construction aggregate. The rock could be worth up to $25-billion, depending on its quality.