Yesterday, Idenix Pharmaceuticals (IDIX) was acquired by Merck for a 229% premium. That’s one of the biggest one day moves ever for a stock listed on the New York Stock Exchange. Billionaire and top hedge fund manager, Seth Klarman of the Baupost Group, made over $1 billion on his investment in Idenix, in one day.
How did he do it?
Klarman owned 35.4% of Idenix (almost 54 million shares). He paid around $300 million for his original stake, which is now worth $1.3 billion.
It’s very common in the hedge fund world for investors like Klarman to take such large positions in a single company. They spend a lot of money on talent and research, sometimes tens of millions of dollars, in an effort to uncover the investment opportunities that offer the potential to make multiples on their investment. When they find good candidates, like Idenix, they tend to bet big.
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