Billionaire investor Seth Klarman bets $200 million on Outbrain ahead of the ad-tech group’s IPO

Seth Klarman
Seth Klarman.

  • Seth Klarman’s Baupost has invested $200 million in Outbrain ahead of the ad-tech group’s IPO.
  • The billionaire investor’s hedge fund bought Outbrain bonds that might be convertible into stock.
  • Baupost bet on online advertising last year by investing in Google-parent Alphabet and Facebook.
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Billionaire investor Seth Klarman has plowed $200 million into Outbrain ahead of its planned IPO, the advertising-technology group revealed this week in an amended registration statement.

Outbrain sold $200 million worth of bonds to Klarman’s Baupost Group hedge fund in a private placement on July 1, two days after publicly filing to join the stock market. Baupost can exchange the bonds for convertible notes, which can be swapped for common stock under “certain circumstances,” Outbrain’s updated filing to the Securities and Exchange Commission said.

Baupost – which manages about $31 billion of assets – shares Outbrain’s “vision and commitment for our business, our team and our future prospects,” Outbrain’s co-CEO David Kostman said in a press release about the investment.

An ad-tech company that places recommendation feeds on websites might seem like an unusual bet for Baupost. After all, Klarman’s nickname is the “Oracle of Boston” because he follows a similar value-investing approach to Warren Buffett’s, and many see him as the spiritual successor to the Berkshire Hathaway CEO.

However, Baupost invested in Google-parent Alphabet and Facebook early last year, and held a combined $984 million of the pair’s shares at the end of March, suggesting it has warmed to the online-advertising space.

Baupost is also following Berkshire’s example by striking a deal with a private business. Buffett’s company agreed to plow $570 million into Snowflake when the cloud-data platform listed last year, and recently injected $500 million into Nubank as part of the Brazilian fintech’s latest funding round.

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