Seth Klarman warns IPO frenzy threatens market liquidity

Baupost Group chief executive Seth Klarman cautioned investors that a surge of blockbuster IPOs is draining capital from the broader market. Speaking on Bloomberg’s “Masters in Business” podcast on June 19, he highlighted the recent SpaceX listing and upcoming offerings from OpenAI and Anthropic as examples of large deals that force institutional portfolios to rebalance, pulling money away from existing equities.

Klarman warned that this concentration of capital could create a liquidity strain and resemble past late‑cycle IPO booms that preceded market stress, such as the late‑1990s dot‑com wave and the 2021 SPAC surge. He also noted possible spill‑over effects into crypto‑related assets as the same capital chases high‑growth sectors, especially artificial‑intelligence investments.