People are always interested in successful billionaires. Stephen Mandel, the founder of Lone Pine Capital, is one of these billionaires. His hedge fund has approximately $13 billion assets under management and his personal wealth is about one tenth of that. How can he become so rich? Well, his fund returned about 25% on average annually from 1997 to 2008, beating the S&P 500 by over 20 percentage points per year. As one of the Tiger cubs, Mandel learned a lot from Julian Robertson during his work at Tiger Management before launching his own hedge fund in 1997. The 1978 graduate of Dartmouth College also once worked at Goldman Sachs & Co and Mars & Co in the 1980s.
Mandel’s 13F portfolio went down from $13.3 billion at the end of June to $12.3 billion at the end of the third quarter. He also slightly reduced the number of positions in the portfolio. Lone Pine Capital had 57 positions at the end of the second quarter. Now it has 55 positions. Mandel sold out his position in Netflix Inc (NFLX). His Lone Pine Capital disclosed to own $170 million worth of the stock at the end of June and the fund did not report to own any shares of NFLX in its latest 13F. Mandel luckily cut his losses quickly and avoided suffering a huge loss. NFLX lost 32.5% since the end of September, while SPY returned 7.92% during the same period. In addition to NFLX, Mandel also sold out his positions in Family Dollar Store (FDO), American Tower Corp (AMT), Nielsen Holdings Nv (NLSN), Accenture Ltd (ACN), Medco Health Solutions (MHS), and O’Reilly Automotive Inc (ORLY).
Mandel increased his stakes in Oceaneering International Inc (OII). His Lone Pine Capital reported to had $214 million invested in the stock at the end of September, up 990% from only $19.6 million at the end of the second quarter. OII returned 27.28% since the end of the third quarter, beating the SPY by almost 20 percentage points. Mandel also increased his position in News Corp (NWSA) by 391% to $411 million. NWSA returned 7.3% since September 30, slightly lower than the 7.92% of the SPY in the same period.
Mandel opened a new position in Las Vegas Sands Corp (LVS). Lone Pine Capital initiated a brand new $282 million worth of LVS shares over the third quarter. LVS returned 19.51% since the end of September, outperforming the market by around 12%. Mandel also opened new positions in Visa Inc (V), NII Holdings Inc (NIHD), United Technologies Corp (UTX), Fossil Inc (FOSL), and Sears Holdings Corp (SHLD).
Mandel is also bullish bout Williams Sonoma Inc (WSM). Lone Pine Capital did not disclose to own any shares of WSM at the end of the second quarter. According to the fund’s recent 13F, it had $179 million invested in the stock at the end of September. WSM returned 20.52% since the end of September, beating the market by over 12 percentage points. The five biggest positions in Mandel's portfolio were Apple (AAPL), Cognizant (CTSH), Dollar General (DG), Google (GOOG), and Ralph Lauren (RL).
Stephen Mandel is worth following. He has learned from legendary investor Robertson and generated solid returns by himself. In the third quarter, he sold out NFLX, bought OII, LVS and a few other strong performing stocks. We believe that investors will be able to outperform the market in the long term by focusing on Mandel’s best stock picks.