10 Big Sells By Billionaire Stephen Mandel

|
 |  Includes: ACN, ADSK, AMT, DVA, EMR, FDO, MHS, NFLX, NLSN, ORLY, PALL, PCLN, PPLT, RL
by: Insider Monkey

The hedge fund legend, Julian Robertson, once employed and mentored many analysts and managers at Tiger Management. Many of these professionals left Tiger Management later and started their own hedge funds. Some of these funds, known as “Tiger cubs”, became the best-known hedge fund firms in the world. Stephen Mandel is one of these successful hedge fund managers. He worked for Robertson before launching Lone Pine Capital in 1997. The fund returned nearly 25% annually from 1997 to 2008, heavily beating the market by more than 20% per year. These stunning returns made Mandel a billionaire. Lone Pine Capital currently has approximately $13 billion in AUM and Mandel’s personal wealth is around one tenth of that.

Among the 300+ hedge funds tracked by Insider Monkey, Mandel’s Lone Pine Capital is definitely one of the hedge funds we recommend investors to imitate. In addition to investing in the best stock picks of the fund, we also suggest investors paying attention to the stocks sold out by the fund.

Below is a list of top 10 stocks Mandel’s Lone Pine Capital sold out during the third quarter.

Company Name

Ticker

Value at the end of June ($*1000)

POLO RALPH LAUREN CORP

RL

541831

O REILLY AUTOMOTIVE

ORLY

364458

MEDCO HEALTH SOLUTIONS

MHS

207742

ACCENTURE LTD IRELAND

ACN

200952

NIELSEN HOLDINGS NV

NLSN

185837

AMERICAN TOWER CORP

AMT

178607

FAMILY DOLLAR STORES

FDO

173108

NETFLIX INC

NFLX

167969

E T F S PALLADIUM TRUST

PALL

84281

E T F S PLATINUM TRUST

PPLT

60520

Click to enlarge

The largest position sold out by Lone Pine Capital in the third quarter was Polo Ralph Lauren Corp (NYSE:RL). Lone Pine invested $542 million in RL at the end of June, but according to the fund’s latest 13F, it did not own any shares of RL at the end of September. Since September 30th RL returned 9.38%, versus 10.46% for SPY in the same period. Lone Pine Capital also sold out large stakes in O Reilly Automotive Inc (NASDAQ:ORLY), Medco Health Solutions Inc (NYSE:MHS), and Accenture Ltd Ireland (NYSE:ACN), but these three stocks generated better-than-market return so far since the end of September.

Lone Pine Capital made a very smart decision in selling out its entire stake in Netflix Inc (NASDAQ:NFLX). The fund had nearly $170 million invested in this stock at the end of the second quarter. NFLX suffered a big loss during the fourth quarter, declining 43.03%. Lone Pine Capital luckily minimized its loss in this position. This wasn’t a random move where Lone Pine reduced its stakes in momentum stocks. Actually Lone Pine boosted its stake in Priceline (NASDAQ:PCLN) by 80% during the third quarter. PCLN returned 8.7% since September. Chase Coleman and Curtis Macnguyen were among other hedge fund managers who dumped their entire NFLX bets during the second quarter.

Lone Pine Capital also sold out American Tower Corp (NYSE:AMT), ETFS Palladium Trust (NYSEARCA:PALL), and ETFS Platinum Trust (NYSEARCA:PPLT) during the third quarter, and all three stocks underperformed the market since the end of the third quarter. On average, the top 10 stocks sold out by Lone Pine Capital returned 5.59% since the end of September, underperforming the market by nearly 5 percentage points. In addition to the 10 stocks on the list above, Lone Pine also sold out its smaller stakes Emerson Electric Co (NYSE:EMR), Autodesk Inc (NASDAQ:ADSK), and Davita Inc (NYSE:DVA). Investors may be able to uncover some short candidates by analyzing these stocks that aren’t favored by Mandel anymore.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.