The Walt Disney Co. (DIS) and Fox Corp. (FOX)(FOXA)
Klarman previously amassed a sizable position in Twenty-First Century Fox. When Disney moved to acquire the company, his interests were split.
When the deal closed earlier this year, Twenty-First Century Fox shareholders (including Klarman) received roughly $38 per share in cash or Disney stock, plus one-third of a share of the new Fox.
It's tough to tell exactly how Klarman converted his holdings, but it appears as if he opted to maintain his bet mostly on Fox. Following the acquisition, Klarman's Disney position is just 0.4% of his portfolio, while Fox composes 10.1%.
This could be an interesting way to play Klarman's bet on Fox. Since the new Fox was created in March, shares have fallen by 10%. Disney stock, meanwhile, is up nearly 20%.
Perhaps the asymmetry can be attributed to forced selling as all investors were given a one-third share of the new Fox regardless of whether they wanted it.
Typically, the stock of the smaller entity is what is sold off. With Disney's $242 billion market cap easily outweighing Fox's $23 billion valuation, it's easy to see that occurring here.
Now trading at less than 15 times forward earnings, Fox is one of the cheapest stocks in Klarman's portfolio based on absolute valuation.
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