Hedge Fund Portfolio Tracking: Stephen Mandel's Lone Pine Capital, Q4 2008

This is the Fourth Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

The funds we have already covered include:

• Paulson & Co (John Paulson)
• Carl Icahn
• Warren Buffett

Next up is Lone Pine Capital, which is managed by Stephen Mandel Jr. His $7 Billion fund has returned over 25% annually since its inception in 1997. Last year was rough on them and many others, as noted in our list of 2008 year-end hedge fund performance numbers. Why is Mandel worth following, you might ask? Well, he served as a consumer/retail analyst for Tiger Management back in the day for legendary investor Julian Robertson. Robertson's protégés/right-hand men have been nicknamed the "Tiger Cubs" and many have started their own funds. Therefore, not only has Mandel learned from one of the best, but also he has put up some very solid returns himself. He is well versed in the ways of finding undervalued companies and his funds typically like to sniff out solid companies, with good management that are trading below their intrinsic value. Before checking out this 13F, we recommend looking over its last portfolio update so you can put things in perspective.

The following were its long equity, note, and options holdings as of December 31, 2008 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.

Some New Positions (Brand new positions that it initiated in the last quarter):

• Activison (ATVI)
• Abercrombie & Fitch (ANF)
• Carnival (CCL) paired certificate
• Coach (COH)
• Fomento Economico (FMX)
• Google (GOOG)
• JP Morgan Chase (JPM)
• Las Vegas Sands (LVS)
• Monsanto (MON)
• SPDR Gold Trust (GLD) Calls
• Charles Schwab (SCHW)
• Union Pacific (UNP)

Some Increased Positions (A few positions it already owned but added shares to):

• Sears Holdings (SHLD) Puts: Increased position by 11,172%
• Bunge (BG) Puts: Increased position by 9,900%
• Mastercard (MA): Increased position by 197%
• Visa (V): Increased position by 81%
• Precision Cast Parts (PCP): Increased position by 45%
• America Movil (AMX): Increased position by 33.3%
• Teradata (TDC): Increased position by 15.9%
• Qualcomm (QCOM): Increased position by 12.5%
• Dolby Labs (DLB): Increased position by 9.8%
• Lorillard (LO): Increased position by 6.1%

Some Reduced Positions (Some positions it sold some shares of - note not all sales listed):

• XTO Energy (XTO): Decreased position by 66.7%
• Sandridge Energy (SD): Decreased position by 52%

Removed Positions (Positions it sold out of completely):

• Crown Castle (CCI)
• Dicks Sporting Goods (DKS)
• Eagle Materials (EGLE)
• Fastenal (FAST)
• First Horizon (FHN)
• Hansen Natural (HANS)
• National City (NCC)
• SAIC (SAI)
• Weatherford (WFT)

Top 20 Holdings (by % of portfolio):

1. America Movil (AMX): 12.13% of portfolio
2. Qualcomm (QCOM): 11.84% of portfolio
3. Visa (V): 7.21% of portfolio
4. Mastercard (MA): 6.81% of portfolio
5. JP Morgan Chase (JPM): 6.34% of portfolio
6. Union Pacific (UNP): 5.37% of portfolio
7. Monsanto (MON): 4.85% of portfolio
8. Priceline (PCLN): 4.33% of portfolio
9. Google (GOOG): 4.23% of portfolio
10. Precision Cast Parts (PCP): 3.53% of portfolio
11. Lorillard (LO): 3.34% of portfolio
12. Carnivall (CCL) paired certificate: 3.14% of portfolio
13. MSC Industrial (MSM): 2.96% of portfolio
14. Activision (ATVI): 2.85% of portfolio
15. Dolby Labs (DLB): 2.6% of portfolio
16. SPDR Gold Trust (GLD) Calls: 2.48% of portfolio
17. Teradata (TDC): 2.42% of portfolio
18. XTO Energy (XTO): 2.29% of portfolio
19. Coach (COH): 2.09% of portfolio
20. Sears (SHLD) Puts: 2.01% of portfolio

It's interesting to note that while Lone Pine was selling National City, John Paulson's firm was adding it last quarter. Additionally, Lone Pine's removal of Hansen Natural (HANS) from its portfolio is intriguing seeing as the shares have run up a lot recently and we also had seen a large hedge fund presence in this name. If we were to guess, we'd say that the firm deemed it 'too rich' for the time being, as it had ridden shares from the $20s up to the $30s. The firm added heavily to its various put positions, but relative to its total portfolio, they are still a small position. It started new positions in names like GOOG, COH, ATVI, and UNP and brought them in as large positions in the portfolio.

Assets from its long U.S. equity, options, and note holdings were $5.2 billion last quarter and were $6.1 billion this quarter. These assets do not reflect collective firm holdings, but rather the sum of the holdings filed with the SEC. The firm obviously also has short and cash positions (which aren't required in the filings).