Iconic hedge-fund billionaire Seth Klarman could have lost nearly $300 million on an ill-timed bet on PG&E

Getty / Scott Olson
  • Iconic hedge-fund billionaire Seth Klarman’s Baupost Group loaded up on 14,479,790 shares of PG&E,California’s biggest utility provider, in the third quarter.
  • The utility has been under pressure, sliding 60% since November, as it may be responsible for the deadliest and most destructive wildfire in California history.
  • It’s unclear if Baupost sold any PG&E shares in the fourth quarter. If the firm held on to its entire position, it could have lost $US290 million in the final few months of 2018 on the bet.
  • On Monday, PG&E was down more than 22% after a report out late Friday said it was considering filing for bankruptcy protection.
  • Watch PG&E trade live.

Iconic hedge-fund billionaire Seth Klarman could have taken a huge hit on an investment in PG&E – California’s biggest utility provider – after the deadliest and most destructive wildfire in California history.

PG&E shares have plunged 60% since November 8, when the wildfire broke out.The utility said it was having trouble with its transmission lines when the blaze erupted, and that it may be responsible.

Klarman’s Baupost could be paying the price. Baupost loaded up 14,479,790 shares on PG&E in the third quarter, becoming the utility’s sixth-largest shareholder with 18,979,790 shares, according to Bloomberg data.

The 14.5 million shares were trading at around $US45 in the third quarter, and closed the fourth quarter at $US25 apiece. It’s unclear if Baupost sold any PG&E shares in the fourth quarter. If the firm held its entire position through the end of the year, it could have lost $US290 million in the final few months of 2018.

Things have gone from bad to worse for PG&E entering the new year. On Monday, shares were down more than 22%, at $US18.98 a share, after a report out late Friday said it was considering filing for bankruptcy protection as it fears a massive charge related to potential liabilities from the wildfire.

Baupost declined to comment on its investments.

Baupost is not the only investment firm that recently increased its stake in the California utility. BlueMountain Capital Management, which manages $US21 billion, told investors in a recent letter obtained by Business Insider it has doubled down on its investment into the utility as it believes the market has overreacted to the impact of the deadly Camp Fire.

Now read:

PG&EMI

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.