Not bad for a single trade: Baupost Group appears to have made nearly $1 billion on just one of its stock picks.
Seth Klarman's hedge fund firm owns a stake in Idenix Pharmaceuticals, the hepatitis C-focused drug maker that Merck agreed to buy Monday for $3.85 billion, or $24.50 per share. The stock jumped to about $24 a share Monday after closing at $7.23 Friday. Assuming that Baupost still holds the more than 53.3 million shares it disclosed as of March 31, that would mean a paper gain of roughly $900 million.
The apparent big profit on Monday slightly underestimates Baupost's real haul. The Boston-based firm has been accumulating shares since the second quarter of 2011, a year when the purchase price hovered between $3 and $7 a share. The stock briefly surged to about $14 in early 2012, but has mostly traded around $5.