Here are the 8 ‘long-lasting implications’ of the pandemic hedge-fund billionaire Seth Klarman lays out to investors in a new letter

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Hedge-fund billionaire Seth Klarman, in a recent letter to investors, laid out eight “lasting” changes that could come from the pandemic, ranking them in order of most likely to least likely.
Some of the ideas are universally shared: People will be online more than ever, and real estate will be challenged.
Others are more fundamental changes to the way society, especially in the United States: Klarman predicts a “reorganization” of priorities thanks to the deadly pandemic and a rise in organized labor. 

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Seth Klarman is known for thinking beyond his portfolio.

The billionaire founder of Baupost Group, which manages more than $30 billion in assets, often waits for his year-end letter to investors to wax on topics such as varied as WeWork, income inequality, and the global political scene. 

This year, in light of a global pandemic and massive protests against police brutality, Klarman has written investors a 16-page letter after the end of the second quarter on some of the changes he thinks are permanent following the pandemic — and ranked them from most likely to least likely.

See more: Seth Klarman has a rabid following that’s stuck with him through thick and thin. Here’s why fans of the publicity-shy billionaire investor are so obsessed.

The letter, which Business Insider obtained a copy of, runs through changes many agree will be the new normal, and also touches on larger, fundamental shifts for US society as a whole. Baupost declined to comment beyond the letter.

Klarman and his Boston-based firm have been busy this year. For the first time in years, the firm’s flagship fund opened to new money, despite losing 8% in a volatile March. 

The firm didn’t disclose the performance of the fund in the letter, but Klarman wrote that the firm was a net seller of equities in the second quarter, despite stocks rallying. In 2019, the firm made “high single digits,” according to the manager’s letter to investors, despite the overall equity market finishing up 29%. Bloomberg originally reported on the letter. 

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Below are the “long-last implications” of the virus, ranked by Klarman. 

SEE ALSO: eth Klarman has a rabid following that’s stuck with him through thick and thin. Here’s why fans of the publicity-shy billionaire investor are so obsessed.

SEE ALSO: Hedge funds are in unchartered waters right now. Here’s how billionaires like Ray Dalio, Steve Cohen, and Seth Klarman rode out 2008.

Increased digitalization of the global economy

The most likely lasting change is one that was already happening — and then was put into hyperdrive by the pandemic.

Klarman writes that Amazon’s dominance of the ecommerce market has been inflated by the pandemic, and notes that the company now employs more people than the populations of several states.

“In many cases, the COVID-19 pandemic has accelerated changes that were already underway. Indeed, it has been observed that the pandemic has managed to achieve, in a period of months, levels of digital transformation that had been expected to occur over a decade,” he wrote.

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Source:: Business Insider – Finance

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