Seth Klarman’s Baupost controls more than 23% of Viasat Inc (Nasdaq:VSAT)’s outstanding shares. Baupost has been a decade-long investor in this sleepy stock. Viasat Inc’s shares trade pretty much at the same price they were trading five years ago. This week Seth Klarman filed a 13D and disclosed the following:

“Baupost has been granted observer rights with respect to meetings of the board of directors of the Issuer and the committees of the board of directors of the Issuer; however, such rights do not include the right to vote at any such meetings. Please see the Issuer’s press release which is attached to the Form 8-K filed by the Issuer with the U.S. Securities and Exchange Commission on October 3, 2018. The Reporting Persons do not have, as of the date of this filing, any plans or proposals that relate to or would result in any of the actions or events specified in clauses (a) through (j) of Item 4 of Schedule 13D. As a holder of observer rights, Baupost will engage with management and the board of directors of the Issuer concerning the business, operations, governance, strategy, capitalization, ownership and future plans of the Issuer and the management and board composition of the Issuer. The Reporting Persons intend to review their investment in the Issuer on a continuing basis and may also engage in discussions on the same topics with other holders of the Issuer’s Common Stock and other relevant parties. The Reporting Persons may change their plans or proposals in the future. Depending on various factors including, without limitation, the Issuer’s financial position, strategic direction, business and prospects, anticipated future developments, existing and anticipated market conditions from time to time, actions taken by the management and board of directors of the Issuer, price levels of the Issuer’s Common Stock, general economic conditions and regulatory matters, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, purchasing additional shares of the Issuer’s Common Stock or other securities of the Issuer, selling some or all of their shares of the Issuer’s Common Stock or engaging in short selling of, or any hedging or similar transaction with respect to, their shares of the Issuer’s Common Stock, to the extent permitted under applicable law, or engage, discuss, participate in, negotiate or approve a transaction with the purpose or effect of changing or influencing the control of the Issuer, including by entering into one or more confidentiality agreements, standstill agreements, voting agreements, support agreements or other similar agreements with the purpose or effect of facilitating such a transaction. Any such transactions, if they occur at all, may take place at any time and without prior notice.”

A real activist hedge fund would have done much more than getting “observer rights” from a company where it controls nearly a fourth of the outstanding shares. This tells us that Baupost doesn’t have a clear idea about what it wants to accomplish at Viasat Inc.

You might consider Seth Klarman as a shrewd value investor. We don’t care about the reputations of hedge fund managers, we care about their track records. If you had invested in Seth Klarman’s small and mid-cap stock picks between 2008 and 2016, you would have returned an average of 0.45% per month. Too bad that S&P 500 index fund investors returned an average of 0.68% per month during the same period. As you can see Klarman built his reputation based on his returns in the 90's and the first decade of this century. Unfortunately, his performance since 2008 is mind boggling. As a result, we don’t think it is a good idea to follow Klarman into small and mid-cap stocks.