Value Investing Legend Seth Klarman’s New Non-AI Picks

Seth Klarman, the renowned value investor and founder of Baupost Group, has added three new non-AI investments to his portfolio, according to the firm's 13F filings for Q2 2026. The largest of these additions is a stake in CME Group Inc., the operator of financial exchanges where investors trade futures and options contracts. Klarman's purchase of 619,000 CME shares, valued at $136.69 million, represents a 2.52% stake in Baupost's 13F portfolio.

Other new investments include a 0.81% position in Axalta Coating Systems Ltd. worth $43.61 million, and a 0.24% stake in Pagaya Technologies Ltd. valued at $12.88 million. This article delves into CME Group's business model, recent financial performance, and potential growth opportunities. CME Group's revenue increased by 1% year-over-year in Q2 2026, while adjusted earnings per share rose 1%.

The company's underlying trading activity remained robust, with open interest in futures and options contracts surging 8% to 127 million contracts. Bulls point to the potential growth in the US Treasury market as a significant opportunity for CME, as the firm seeks to integrate various components of the fixed-income trading system.

To facilitate this, CME is planning to launch Treasury Link, which aims to streamline the connection between cash Treasury and futures trading. However, a key risk lies in the proliferation of perpetual futures, which lack expiration dates and could divert trading volume from CME's traditional futures products to rival platforms offering deeper liquidity.

CME's forward non-GAAP price-to-earnings ratio stands at 22.42x, more than double the sector median of 11.30x. Its trailing forward P/E ratio is 23.28x, approximately 98% above the sector median of 11.74x. Despite these elevated valuation metrics, CME's stock is trading slightly below its five-year average valuation multiples, as its forward P/E is about 7% below its five-year average of 24.18x.