“The investor then explained his selling strategy. He gave the example if his firm buys a stock at $10 that is worth $20, when it rises to $18 or $18.50 they sell it. -Seth Klarman

In this quote, Seth Klarman explains his selling strategy, emphasizing a disciplined approach to investing. The focus is on realizing gains as a stock approaches its intrinsic value. Here's a breakdown of the key points:

1.        Buying at a Discount: Klarman's firm purchases undervalued stocks, meaning they buy stocks priced significantly below their intrinsic value. For example, they might buy a stock at $10, believing it is worth $20.

2.        Target Price Range: Instead of holding the stock until it reaches its total intrinsic value of $20, they sell it slightly before that point, around $18 or $18.50. This conservative approach helps to lock in gains and manage risk.

3.        Risk Management: By selling before the stock reaches its perceived total value, Klarman's firm mitigates the risk of potential market fluctuations or corrections that could cause the stock to fall before it reaches $20.

4. Discipline and Consistency: This strategy exemplifies a disciplined approach, focusing on consistent and predictable returns rather than attempting to capture every last bit of potential gain.

In summary, Klarman's strategy involves buying undervalued stocks and selling them when they have appreciated to near their intrinsic value, thus securing a profit while managing risk.

Seth Andrew Klarman is an American billionaire investor, hedge fund manager, and author. He is a proponent of value investing. He is the chief executive and portfolio manager of the Baupost Group, a Boston-based private investment partnership he founded in 1982.