Seth Klarman, the legendary head of Boston based hedge fund Baupost Group, sent out his letter to investors this week.

He reports that his fund is up for the month, quarter, and year, but is sending out specifics in separate quarterly reports.

That said: The juicy part of this letter has nothing to do with specific investments or anything like that. What's interesting is that, like some of his industry peers (David Einhorn), Klarman has words for the Fed, and those words are all about QE3.

He said that like QE1 and QE2, QE3 is no lasting solution. He sees it, instead, as "attempted manipulation of Americans' behavior."

From the letter:

While anyone would be glad to have a cheaper mortgage as a result of QE3, would they

really believe this would make their home worth more? It’s more of a credit holiday, whereby

the government offers you better terms than previously available. In addition to making explicit

the implicit U.S. government guarantee of more and more of the U.S. residential mortgage

market, the rousing stock market approval of this measure is seen as a free lunch. But of course

it is not free....

What kind of policy is this: untested; inflationary; eroding free market signals, diverting more of the country’s resources toward housing at the expense of priorities such as infrastructure, technology, or science and medical research; and inevitably only a temporary fix with no enduring benefit?...

Finally, we must the morality of Fed programs that trick people (as if they were Pavlov’s dogs) into behaviors that are adverse to their own long-term best interest. What kind of government entity cajoles' savers to spend, when years of and overspending have left the consumer in terrible shape? What kind of entity tricks its citizens into paying higher and higher prices to buy stocks? What kind of entity drives the return on retirees’ savings to Zero for seven years (2008-2015 and counting) in order to rescue poorly managed banks? Not the kind that should play this large a role in the economy.

So yeah, let it be put on the record. Seth Klarman does not like QE3.