Top Facet Investor's Big Sell-Off

When we wrote earlier this week about Facet Biotech's rejection of Biogen Idec's $356 million hostile bid, we mentioned that Facet's top investor, Baupost Group of Boston, held about 18% of the company as of June 30.

It doesn't anymore. In a regulatory filing Wednesday, Sept. 9, Baupost said it sold about 25% of its Facet stake, or about 1.2 million shares, to drop its ownership to 14%. It made the sale Friday, Sept. 4, the same day Biogen went public with its takeover bid of $14.50 a share. The public bid was 50 cents a share lower, Biogen said, than an earlier private bid it made in late August.

Baupost's new ownership percentage is noteworthy because it drops the investment firm, founded in the early 1980s by Seth Klarman, below the 15% threshold that Facet drew as the trigger for the poison pill plan it adopted in response to Biogen's hostile intentions.

Announced Tuesday, Facet officials said at first that the plan grandfathered in Baupost. Not so. Because Baupost's sell-off occurred on Sept. 4, it predated the adoption of the poison pill plan by three days. The firm is not grandfathered in, after all, according to a Facet attorney.

Klarman did not respond Wednesday to a call for comment. Then again, his words don't come cheaply, though here's a free videoconferenced talk he gave to the business-school students at the University of Western Ontario. (Goooooo, Mustangs!) Klarman is the author of the 1991 book Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor, which is out of print but available on Ebay starting at $800, last time we checked.