Excerpts from Baupost Limited Partnerships （摘录Baupost有限的伙伴关系）.pdfVIP

Excerpts from Baupost Limited Partnerships 2005 Year-End Letter January 26, 2006 Reprinted with permission. Today’s Market Environment: The Bad News About Value Investing Here is the bad news about value investing: value investing itself has never been more popular. Fans of Warren Buffett now fill a sports stadium when they flock to Omaha in May for the Berkshire Hathaway annual meeting. Russell “value” stocks have outperformed Russell “growth” stocks for six consecutive years. Now opportunity is scarce; when we sift through the debt, equity, and real estate markets around the world, we find few bargains. Risks are high, returns low, and markets feel picked over and still expensive. While it receives limited attention, the broadly-based Russell 2000 Index has been making new all- time highs, even as better known indices such as the SP and Nasdaq remain well below peak levels. The asset allocation world is an increasingly desperate place. Capital freely sloshes across asset classes to those purporting to have uncovered the tiniest market inefficiency or mispricing. This has the effect of bidding up prices, thereby lowering the expected return and raising the risk on individual securities and classes of securities. Some say this reflects investors’ acceptance of a lower risk premium; we would call it overpaying. These days, nearly anyone can start a fund to exploit every real or imagined mispricing, and huge sums are routinely allocated to the best performers until they resist new capital entirely, or accept it at the price of being forced to change their style beyond what has made them successful to date. Investors routinely bid increasingly risky and obscure assets to lower and lower returns, with consideration of risk at best an afterthought. Hungry analysts with a computer model searching for a deal are an unusually dangerous breed. More than ever before, past performance is not a reliable predictor of future results. The half- lives of m