This article is first in a series that provides an ongoing analysis of the changes made to Stephen Mandel's US stock portfolio on a quarterly basis. It is based on Mandel's regulatory 13F Form filed on 08/14/2015.
Stephen Mandel founded Lone Pine Capital in 1997. Before that, Mandel worked at Tiger Management under Julian Robertson for eight years, making him a bona fide tiger cub. To know more about Julian Robertson and his legendary Tiger Management, check out Julian Robertson: A Tiger in the Land of Bulls and Bears.
AUM has grown tremendously over the years and is now at around $30B. Although the exact performance details are not disclosed, Mandel is known to have generated enormous alpha over the years: upwards of 20% average annual returns since inception till the financial crisis. His flagship fund lagged the S&P 500 index in 2008 and 2014 but handsomely outperformed in the interim years. Lone Pine Capital is best known for Mandel's acumen and singular approach towards fundamental analysis and bottom up stock picking. They are focused on two areas: a) businesses that create value through organic earnings growth, and b) businesses going through positive management and strategic changes. In the current environment, they also look for businesses that are taking advantage of low interest debt to fund capital investment, share buybacks, etc.
This quarter, Mandel's US long portfolio increased marginally from $26.42B to $26.73B. The number of holdings in the portfolio remained steady at 50: nine positions were eliminated and replaced with an equal number of very small stakes. The top three individual stock positions are at 15.88% while the top five are at 25.38% of the US long assets: Charter Communications, JD.com, Priceline, Microsoft, and Illumina. The top holding is an 8.19% stake in Currencyshares Euro Puts which was established last quarter.
Apple Inc. (NASDAQ:AAPL): The fairly large 3.22% AAPL stake was disposed of this quarter at prices between $125 and $133. The stock currently trades at $113. The position was purchased in Q4 2014 at prices between $96.26 and $119 and increased by ~210% last quarter at prices between $106 and $133.
Note: Apple has seen several roundtrips in the portfolio. The previous one was a ~2.5M share stake established in 2009 at a cost-basis in the low-20s and disposed of in 2011 at much higher prices.
Baidu Inc. (NASDAQ:BIDU) & Calls: The BIDU position was established in Q3 2013 when around 5.3M shares were purchased at prices between $91 and $155. The position size had wavered since although it was back at around the same share count (4.17% of the portfolio stake) as of last quarter. This quarter, the entire position was sold at prices between $189 and $221. The stock is now at $152.
Canadian Pacific Railway (NYSE:CP): The medium-sized 2.18% CP stake was eliminated this quarter at prices between $160 and $198. The stake was established in Q2 2014 at prices between $144 and $185. Last quarter had seen a ~12% trimming. CP currently trades at $144.
Michael Kors (KORS): KORS stake was established in 2011 soon after its December IPO at a cost-basis in the mid-20s. The original position was almost tripled to ~9.2M shares over the following two quarters at a cost-basis in the low-40s. The position size had wavered since and by last quarter it was at just over 11M shares. This quarter, the entire 2.79% of the portfolio stake was disposed of at prices between $42 and $66. The stock is currently at $43.29.
Note: Lone Pine Capital had a 5.8% stake in the business as of Q1 2015.
CDK Global, Cognizant Technology, Jazz Pharmaceuticals, Transocean Puts, and Vipshop Holdings: These are very small positions (less than ~1% of the portfolio each) disposed of this quarter.
Advance Auto Parts, CSX Corporation & Calls, Diageo plc, Electronic Arts, Hanesbrands Inc., Horizon Pharma plc, Kansas City Southern, Perrigo plc, and Charles Schwab: These are very small (less than ~1% of the portfolio each) stakes established this quarter.
Note: A July 27 13G regulatory filing showed Lone Pine Capital owning 8.35M shares (5.4% of the business) of Horizon Pharma (NASDAQ:HZNP): ~160% increase after the quarter ended.
Adobe Systems (NASDAQ:ADBE): ADBE is a medium-sized 2.81% of the US long portfolio position. It was first purchased in Q1 2014 and almost doubled the following quarter at prices between $60 and $73. This quarter saw a ~23% reduction at prices between $73.15 and $83.94. The stock currently trades at $78.91.
HCA Holdings (NYSE:HCA): HCA is a 1.70% of the portfolio stake. The position was established in Q4 2014 at prices between $63 and $75. This quarter saw a ~14% trimming. The stock currently trades at $88.84.
MasterCard Inc. (NYSE:MA): The 3.40% MA stake was established in Q3 2013 at prices between $59 and $69 and increased by ~30% the following quarter at prices between $67 and $83. Q1 2014 saw some selling but the following three quarters saw a huge ~200% increase at prices between $69 and $89. Q1 2015 saw an about-turn: ~50% reduction over the last two quarters at prices between $81 and $96. The stock is currently at $94.06.
Priceline Inc. (PCLN): PCLN is a large (top-three) 5.13% long-term stake first purchased in 2011 at a cost-basis of ~$500. The original position was sold down by ~44% in Q3 2013 at prices between $900 and $1030 and another two-thirds in Q1 2014 at prices between $1132 and $1358. There was a combined ~380% increase over the next three quarters at prices between $1064 and $1280. Last two quarters have seen minor trimming. The stock is now at $1252.
SBA Communications (NASDAQ:SBAC): SBAC is a 1.97% position. The stake is from Q4 2013 and Q1 2014 at prices between $77 and $97. This quarter saw a ~29% reduction at prices between $112 and $124. The stock currently trades at $118.
Note: Lone Pine Capital controls ~3.6% of SBA Communications.
Autodesk Inc. (NASDAQ:ADSK), Barclays Bank plc (NYSE:BCS) Puts, McGraw Hill Financial (MHFI), Sunedison (SUNE), and W R Grace (NYSE:GRA): These positions were reduced to very small stakes (less than 1.5% of the portfolio each) this quarter.
Note: Lone Pine Capital controls ~2.7% of Autodesk Inc.
Cheniere Energy (NYSEMKT:LNG), Ulta Salon (NASDAQ:ULTA), Valeant Pharmaceuticals (VRX), and Visa Inc. (NYSE:V): These are significantly large stakes that were reduced marginally (less than ~10% reduction each) this quarter. As the activities were very minor, they do not indicate a change in bias.
Note: Lone Pine Capital controls ~3.6% of Ulta Salon.
Allergan plc (NYSE:AGN) previously Actavis plc: AGN is a 2.61% of the US long portfolio position established last quarter at prices between $255 and $317 and increased by ~25% this quarter at prices between $283 and $313. The stock currently trades at ~$311.
Charter Communications (NASDAQ:CHTR) & Calls: The 5.40% CHTR stake is the largest individual stock position in the 13F portfolio. The stake was established in Q3 2014 at prices between $152 and $164 and the following quarters also saw minor buying. This quarter saw a whopping ~150% increase at prices between $168 and $193. The stock is currently at $181.
Note: A July 16, 2015 regulatory 13G filing showed Lone Pine Capital owning 6.34M shares (5.7% of the business) of Charter Communications: ~25% reduction after the quarter ended.
Equinix Inc. (NASDAQ:EQIX): EQIX is a medium-sized 2.86% portfolio stake. It is a long-term position first purchased in 2010. Around 4M shares were acquired at the time at a cost-basis in the low-80s. The position size has wavered since although by Q4 2014, the stake was back at ~4M shares. Last quarter saw a ~30% reduction at prices between $217 and $239. This quarter saw a ~10% increase. The stock is now at $269.
Note: Lone Pine Capital controls ~5.3% of Equinix.
Facebook Inc. (NASDAQ:FB): The current 3.13% FB stake was purchased in Q3 2014 at prices between $66.34 and $78.79. This quarter saw a ~20% increase at prices between $77.46 and $88.86. The stock currently trades at $90.57.
Note: FB has seen a previous presence in the portfolio. Around 11M shares were purchased in Q4 2012 at prices between $19 and $29. The stake was disposed of in 2013 and early 2014 at much higher prices, realizing huge gains.
Illumina Inc. (NASDAQ:ILMN): ILMN is a top-five 4.64% of the US long portfolio stake. It was purchased last quarter at prices between $181 and $203 and almost doubled this quarter at prices between $182 and $221. The stock currently trades at $200.
Microsoft Corporation (NASDAQ:MSFT): MSFT is a top-five 4.86% position. Around 27M shares were purchased in Q4 2013 at prices between $34 and $38. Q4 2014 saw a huge ~75% reduction at prices between $43 and $50. The position was built back up to ~29.4M shares over the last two quarters at prices between $40.40 and $47.59. The stock currently trades at $43.73.
Nike Inc. (NYSE:NKE) and Williams Companies (NYSE:WMB) & Calls: These two medium-sized stakes were established last quarter and increased by ~25% each this quarter. The 2.89% NKE stake was purchased at prices between $91 and $110 and it is now at $112. The 3.70% WMB position was established at prices between $40.94 and $60.86 and the stock currently trades at $48.03.
Endo International plc (NASDAQ:ENDP), JD.com Inc. (NASDAQ:JD), Liberty Media Corp. (LMCA) (LMCK), and SolarWinds Inc. (NYSE:SWI): These positions were increased marginally (less than ~10% each) this quarter. As the activities were very minor, they do not indicate a change in bias.
Note: Lone Pine Capital has a ~3% ownership stake in SolarWinds Inc.
Arista Networks (NYSE:ANET), Fidelity National Financial (NYSE:FNF) & Calls, Lowe's Companies (NYSE:LOW), Vulcan Materials (NYSE:VMC), and Walgreens Boots Alliance (NASDAQ:WBA) & Calls: These are very small (less than ~1.5% of the portfolio each) positions that were increased substantially this quarter. The sizing is still too small to indicate a clear bias.
Currencyshares Euro Puts and FleetCor Technologies (NYSE:FLT): These two fairly large stakes were kept steady this quarter. The short Euro stake through Currencyshares Euro Puts is a huge 8.19% position established last quarter. The 3.20% FLT stake is from 2013 - Mandel is sitting on large gains on this position.
Note: Lone Pine Capital controls ~6% of FleetCor Technologies.
DaVita Healthcare (NYSE:DVA), Mohawk Industries (NYSE:MHK), Proshares Ultra VIX Short Term Puts, Realogy Holdings (NYSE:RLGY), and TransDigm Group (NYSE:TDG): These small positions (between 1% and 2% of the portfolio each) were kept steady this quarter.
Note: Lone Pine Capital controls 7.1% of Realogy Holdings and 4.1% of TransDigm Group.
The spreadsheet below highlights changes to Mandel's US stock holdings in Q2 2015:
Disclosure: I am/we are long SHLD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.