Abrams Capital

David Abrams, the history major-turned billionaire value investor

In this article, we will dive into Abrams Capital, a $10 billion AUM Boston-based value hedge fund. You will learn about the story of David Abrams, a history major turned billionaire value investor, his investment philosophy, his views on generalist vs. specialist approaches, portfolio management, sell discipline, and the profile of Abrams Capital Management, including team member backgrounds and the fund’s economics.

Let’s dive in.

David Abrams

David Abrams

David Abrams is the billionaire founder of Abrams Capital Management, a $10 billion AUM Boston-based hedge fund. He was a protégé of legendary value investor Seth Klarman at the Baupost Group, where Abrams worked for 10 years.

David Abrams grew up in New Jersey and graduated from the University of Pennsylvania with a BA in History. His entry into the finance world was serendipitous, starting his career in merger arbitrage and special situations. These event-driven strategies, by their nature, didn't allow for long-term holdings, so Abrams rarely saw how businesses evolved. He continued to hone his skills at another firm, focusing on merger arbitrage and distressed debt. He lived in New York City for five to six years before making a pivotal move to Boston.

In 1988, Abrams joined the Baupost Group as the third member of the team, working alongside Klarman and another colleague. At the time, Baupost managed a substantial $180 million in assets. During his ten years at Baupost, Abrams gained exposure to a wide variety of investment opportunities, everything from stocks and merger deals to bankruptcies, bank bailouts, real estate, and Japanese warrants.

In 1998, Abrams decided to take a year off to contemplate his next career move. Although he initially considered exploring opportunities outside of investing, his passion for asset management ultimately brought him back to the industry. In hindsight, this decision was fortunate for both his clients and himself.