Seth Klarman, the legendary value investor who runs Baupost Group, reshuffled his portfolio in the third quarter with some moves that would make his intellectual mentor Warren Buffett smile. The hedge fund disclosed several new positions and significant changes to existing holdings in its latest 13F filing.

Let's break down what Klarman was buying and selling as of September 30.

Fresh Additions to the Portfolio

Baupost opened three new positions during the quarter, with the railroad play standing out as particularly notable:

Union Pacific Corp (UNP) led the new additions with 1,496,204 shares. This investment immediately catapulted the railroad operator into the fund's top holdings at 7.4% of the portfolio. It's a classic value play that fits squarely within the Buffett-style investing principles Klarman is known to follow.

The fund also picked up 1,395,000 shares of Genuine Parts Company (GPC), the automotive and industrial parts distributor, along with 3,600,000 shares of Americold Realty Trust (COLD), a cold storage REIT.

These additions suggest Klarman sees value in companies with tangible assets and essential business models. Railroads and parts distribution aren't exactly sexy growth stories, but that's never been Baupost's style anyway.

Out the Door

Baupost completely exited five positions in the third quarter, according to data from 13finfo:

Both classes of Liberty Broadband (LBRDA) and (LBRDK) got the boot, along with packaging company Amcor PLC (AMCR), clinical research organization ICON PLC (ICLR), and satellite communications provider Viasat Inc (VSAT).

The Liberty Broadband exit is particularly interesting given the fund's continued holdings in other Liberty assets. Sometimes even value investors know when to cut ties.

Bigger Bets and Trimmed Positions

The most dramatic increases came in healthcare and fast food. Elevance Health (ELV) saw a massive 114% boost, while Restaurant Brands International (QSR) jumped 104%. Baupost also added to Eagle Materials Inc (EXP) with a 39% increase and made a modest 2% bump to Ferguson Enterprises Inc (FERG).

On the selling side, WESCO International (WCC) took the biggest haircut at negative 32%. But the tech crowd will probably focus on this: Baupost trimmed its Alphabet Inc (GOOG) position by 29%. That's the Magnificent Seven stock referenced in the headline, for those keeping score at home.

The fund also reduced Willis Towers Watson (WTW) by 17%, Liberty Global (LBTYK) by 12%, and CRH Plc (CRH) by 12%.

The Top Ten

As of September 30, here's how Baupost's top holdings stack up:

Restaurant Brands International (QSR) remains the crown jewel at 11% of the portfolio, followed by Alphabet (GOOG) at 9.4% despite the trim. Elevance Health (ELV) comes in at 8.9%, boosted by that massive increase.

CRH Plc (CRH) holds 8.5%, Willis Towers Watson (WTW) sits at 7.9%, and the newly acquired Union Pacific (UNP) already commands 7.4% of assets.

Rounding out the top ten: WESCO International (WCC) at 6.6%, Dollar General Corporation (DG) at 5.8%, Liberty Global (LBTYK) at 5.3%, and Ferguson Enterprises (FERG) at 5.2%.

Notably, Dollar General was the only top holding that remained unchanged during the quarter. When everyone else is getting adjusted, sometimes doing nothing is its own kind of statement.

The portfolio moves reflect Klarman's continued commitment to value investing principles. While much of the market chases artificial intelligence and growth stocks, Baupost is loading up on railroads, healthcare companies, and restaurant chains. It's a reminder that different investing styles can coexist, even if they're reading completely different chapters of the market playbook.