"Mini Buffett": I don't invest in AI! The biggest regret is missing out on early Palantir and losing out on hundreds of billions of dollars, and I am optimistic about the commercial real estate market that has been 'burned' by the market.

Legendary investor Seth Klarman, the founder of Baupost Group, recently sat down for an in-depth interview with CNBC host Sarah Eisen. Known as the "Boston Buffett" and with only 5 losing years in Baupost's 44-year history, Klarman issued a stern warning about the current AI frenzy in this conversation. Klarman believes that the current tech boom is showing clear signs of a bubble. Faced with highly stretched market valuations, value investors should stick to their principles, steer clear of "melting ice cubes" whose value continues to shrink, and even be willing to hold cash until the perfect "fat pitch" presents itself. At the same time, Klarman expressed deep concerns about America's soaring debt problem and unresolved geopolitical risks. Key points summarized by Wall Street learned include: - The current AI boom exhibits bubble characteristics, so investors should not blindly invest in large-model companies: Market valuations are extremely stretched, and people are making overly optimistic promises and assumptions about a distant future to cater to the "new age thinking." Klarman made it clear that Baupost is currently not involved in highly valued and heavily cash-burning trillion-parameter LLM (large language model) companies such as OpenAI and Anthropic. - Revealing the biggest regret of his investment career: missing out on the billion-dollar profit from Palantir: Klarman revealed that 15 to 20 years ago, there was an opportunity to buy a risk investment stake in Palantir, and the team had conducted thorough research and was prepared to bid, but the seller backed out at the last minute. This missed opportunity resulted in missing out on billions in returns. - Value investing is not a rigid formula: stay away from "melting ice cubes": Value investing is not simply about looking for stocks with low P/E ratios or low P/B ratios but evaluating the actual intrinsic value of a company. In the AI era, many traditional businesses with fundamental flaws are rapidly losing their intrinsic value ("melting ice cubes"), and even if their valuation is low, investors must decisively stay away. - Optimism about distressed commercial real estate: With the downturn and clearances in the commercial real estate market over the past ten years, Baupost is cautiously optimistic about distressed commercial real estate (especially high-end assisted living communities) and land options for data centers with significantly lower reset costs and strong margin of safety. - Severe underestimation of the US debt crisis and unresolved macroeconomic shadows: US debt now accounts for 100% of GDP, signaling that traditional "risk-free assets" are becoming increasingly dangerous; meanwhile, the market has not fully digested the potential impact of a Middle East war (such as the closure of the Strait of Hormuz) on international oil prices (which could soar to over $150) and the potential impact of secondary inflation. - The secret to 44 years of only 5 losses: extreme paranoia for downside protection In the opportunity to sell shares in a Boston TV station and computer consulting business on Channel 5, Baupost was initially founded in the form of an "expanded family office" with $27 million. Klarman pointed out that Baupost never blindly pursued the expansion of investment scale, and its core DRIVE was to provide good returns for clients with limited downside risks. To achieve this goal, the buyer demonstrated extreme focus on downside protection: rigorous fundamental research for each company, resolutely not leveraging investment portfolios, purchasing senior securities with structural preferential repayment rights in the private market, and being willing to hold cash in the absence of immediate high certainty opportunities. Klarman emphasized that it was precisely this perseverance in maintaining a lonely stance in a frenzied market that enabled the team to have sufficient ammunition to bottom-fishing and lock in high returns in the worst crisis environments.