Tracking Stephen Mandel's Lone Pine Capital Portfolio - Q4 2016 Update

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Includes: ADBE, ALGN, AMZN, ATVI, AVGO, BABA, BAC, BCS, CHTR, COMM, DLTR, EA, EBAY, ECA, EQIX, EXPE, FB, FLT, GOOG, GOOGL, HCA, HDB, HLT, ICE, KMI, LNG, LULU, MHK, MNST, MSFT, NKE, PCLN, PNC, PYPL, RICE, SHLD, SHPG, STZ, SYMC, TDG, TV, ULTA, V, VMC, WMB, YUM, YUMC
by: John Vincent

Summary

Stephen Mandel’s 13F portfolio value decreased from $22.40B to $19.16B. The number of positions increased from 40 to 41.

Lone Pine Capital added PayPal, PNC Financial, and Bank of America while dropping Monster Beverage and Yum Brands.

The top three individual stocks are Charter Communications, Constellation Brands, and Amazon.com and they add up to ~17% of the portfolio.

This article is part of 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 02/14/2017. Please visit our Tracking Stephen Mandel's Lone Pine Capital Portfolio article for an idea on his investment philosophy and our previous update for the fund's moves during Q3 2016.

This quarter, Mandel's US long portfolio value decreased ~15% from $22.40B to $19.16B. The number of holdings increased from 40 to 41. The top three individual stock positions are at 17.25% while the top five are at 26.08% of the US long assets: Charter Communications (NASDAQ:CHTR), Constellation Brands (NYSE:STZ), Amazon.com (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), and Activision Blizzard (NASDAQ:ATVI).

Stephen Mandel worked at Tiger Management under Julian Robertson for eight years starting in the late 1980s, 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.

Stake Disposals:

Yum Brands (NYSE:YUM): The 2.54% YUM stake was first purchased in Q1 2016 at prices between $40 and $58 and increased by a whopping ~560% the following quarter at prices between $55 and $62. There was a ~37% selling last quarter at prices between $59 and $67 and the remaining position was disposed this quarter at prices between $60 and $65. The stock is now at $65.95.

Note: The prices quoted above are adjusted for the Yum China (NYSE:YUMC) separation that closed in November 2016.

Monster Beverage (NASDAQ:MNST): MNST was a 2.72% portfolio stake purchased in Q1 2016 at prices between $39 and $50 and increased by ~270% the following quarter at prices between $41 and $54. The disposal this quarter was at prices between $41 and $50. The stock is now at $43.55.

Note: The prices quoted above are adjusted for the 3-for-1 stock split in November 2016.

Mohawk Industries (NYSE:MHK): The very small ~1% MHK stake was eliminated this quarter at prices between $177 and $205. The original position was purchased in Q3 2014 at prices between $126 and $148 and had since seen selling. The stock is now at $226.

HCA Holdings (NYSE:HCA), Hilton Worldwide (NYSE:HLT), and Kinder Morgan (NYSE:KMI): These are very small (less than ~2% of the portfolio each) starter positions purchased last quarter but disposed this quarter.

New Stakes:

PayPal Holdings (NASDAQ:PYPL), PNC Financial Services (NYSE:PNC), and Bank of America (NYSE:BAC): These three medium-sized ~2.5% portfolio stakes were established this quarter. The 2.57% PYPL position was purchased at prices between $38 and $44 and the stock currently trades at $43.07. PNC was a 2.56% portfolio stake established at prices between $88 and $118 and it is now well above that range at $127. The 2.50% BAC position was purchased at prices between $15.50 and $23 and the stock is now above that range at $24.23.

Note: PayPal Holdings has seen a previous round trip: It was ~2% of the portfolio position established in Q1 2016 at prices between $31 and $41.50 and disposed of last quarter at prices between $36 and $41.

Symantec Corporation (NASDAQ:SYMC), Encana Corporation (NYSE:ECA), Rice Energy (NYSE:RICE), and Barclays plc (NYSE:BCS): These are very small (less than ~1.5% of the portfolio each) starter positions established this quarter.

Note: A regulatory filing since the quarter ended indicates that the stake in Rice Energy was increased by around three times after the quarter ended. The current position is at 11.7M shares (5.8% of the business).

Stake Decreases:

Charter Communications & Calls: The ~7% CHTR position is the largest stake in the portfolio. It was first purchased in Q3 2014 at prices between $152 and $164 and the following quarters also saw minor buying. Q2 2015 saw a whopping ~150% increase at prices between $168 and $193. Q4 2015 saw an about turn: ~50% reduction at prices between $175 and $193. The stock is currently at $327. There was a ~10% increase last quarter while this quarter saw a similar trimming. Lone Pine Capital is starting to harvest huge gains.

Nike Inc. (NYSE:NKE): The fairly large 3.82% NKE stake was purchased in Q1 2015 at prices between $46 and $55 and decreased by ~20% in Q3 2015 at prices between $52 and $63. The stake was doubled in Q4 2015 at prices between $61 and $68. Q2 2016 saw another ~50% increase at prices between $52 and $62. It currently trades at ~$57.86. Last quarter saw a ~5% trimming and that was followed by a ~20% reduction this quarter at prices between $49.50 and $53.

Note: The prices quoted above are adjusted for the 2-for-1 stock split in November 2015.

Dollar Tree (NASDAQ:DLTR): DLTR is 3.75% of the portfolio position. It was established in Q3 2015 at prices between $65 and $82 and increased by ~150% the following quarter at prices between $61 and $80. The stock currently trades at $79.41. The last two quarters had seen a one-third increase at prices between $75 and $98. There was an about turn this quarter: ~40% sold at prices between $73.50 and $90.

Note: Lone Pine Capital controls ~3.9% of DLTR.

Facebook (NASDAQ:FB): The 3.56% FB stake was purchased in Q3 2014 at prices between $66 and $79. Q1 2015 saw the original stake reduced by ~40% at prices between $74 and $84. Q1 2016 saw a ~17% increase at prices between $94 and $116. There was a ~45% selling last quarter at prices between $114 and $131 and that was followed with a ~5% trimming this quarter. The stock currently trades at ~$135.

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.

FleetCor Technologies (NYSE:FLT): The 3.46% FLT stake is from 2013 and Mandel has huge gains on this position. Q3 2015 saw a ~17% increase at prices between $138 and $164. The last three quarters had seen a combined ~25% reduction at prices between $113 and $175. It currently trades at ~$169. This quarter also saw a ~4% trimming.

Note: Lone Pine Capital controls ~5.1% of FleetCor Technologies.

TransDigm Group (NYSE:TDG): TDG is a long-term 2.64% portfolio position. The original stake is from 2009 at a cost basis in the mid-30s. The stock has returned over 7 times and it currently trades at $251. The last two quarters have seen a ~15% selling at prices between $260 and $292.

Note: Lone Pine Capital controls ~3.8% of TransDigm Group.

Expedia Inc. (NASDAQ:EXPE): EXPE is a 2.55% position established last quarter at prices between $106 and $119 and reduced by ~40% this quarter at prices between $113 and $132. The stock is now at $119.

Note: Lone Pine Capital controls ~3.1% of Expedia Inc.

Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL): The 2.53% portfolio stake in GOOG was established in Q4 2015 at prices between $608 and $777 and increased by ~74% the following quarter at prices between $678 and $765. Q2 2016 saw a ~26% reduction at prices between $668 and $767 and that was followed with another ~20% selling last quarter at prices between $692 and $787. There was another ~25% selling this quarter at prices between $736 and $813. The stock currently trades at ~$829.

Vulcan Materials (NYSE:VMC): VMC is 2.44% of the portfolio stake. The bulk of the original position was purchased in Q1 & Q2 2015 at prices between $67 and $92. The last two quarters had seen a ~54% further increase at prices between $106 and $127. There was an about turn this quarter: ~25% reduction at prices between $106 and $136. The stock currently trades at $118.

Ulta Beauty (NASDAQ:ULTA): ULTA is a medium-sized 2.39% stake first purchased in 2012 at much lower prices. Q1 2016 saw a ~40% increase at prices between $153 and $173. There was a ~12% reduction last quarter at prices between $233 and $276 and that was followed with another ~40% selling this quarter at prices between $228 and $266. The stock is now at $276. Mandel is harvesting gains.

Note: Lone Pine Capital controls ~2.9% of Ulta Salon.

Priceline Inc. (NASDAQ:PCLN): The long-term 2.33% PCLN stake was 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. 2015 saw a ~40% reduction at prices between $1008 and $1454.

Q2 2016 saw the pattern reverse: ~42% increase at prices between $1186 and $1390. The last quarter saw a ~50% selling at prices between $1248 and $1473 and that was followed with another ~50% reduction this quarter at prices between $1424 and $1578. The stock is now at $1632.

Lululemon Athletica (NASDAQ:LULU): LULU is ~1.5% of the portfolio stake established in Q4 2015 at prices between $44 and $54 and increased by ~43% in Q2 2016 at prices between $60 and $74. The position was reduced by ~25% last quarter at prices between $61 and $81 another ~20% this quarter at prices between $55 and $70. The stock currently trades at $65.32.

Note: Lone Pine Capital controls ~3.5% of LULU.

Cheniere Energy (NYSEMKT:LNG): LNG is ~1% of the portfolio position first purchased in H2 2014 at prices between $65 and $84. There was another ~55% increase in Q3 2015 at prices between $47.50 and $71. The last quarter saw some selling: ~17% disposed at prices between $37 and $46 and that was followed with ~50% selling this quarter at prices between $35.50 and $43.50. The stock currently trades at $47.46. Lone Pine realized losses.

Note: Lone Pine Capital controls ~2.2% of the business.

eBay Inc. (NASDAQ:EBAY): EBAY was a large (top three) 4.87% of the portfolio position purchased last quarter at prices between $23.50 and $33. This quarter saw a ~70% reduction at prices between $27 and $33. The stock currently trades at $34.06. The quick about turn in a large position indicates a bearish bias.

Grupo Telivisa (NYSE:TV), HDFC Bank (NYSE:HDB) and Intercontinental Exchange (NYSE:ICE): These very small (less than ~1.5% of the portfolio each) positions saw reductions this quarter. The TV and ICE positions were established last quarter while the HDB stake is from Q1 2015.

Stake Increases:

Constellation Brands: STZ is a top three 5.11% stake established in Q3 2015 at prices between $115 and $131. The following three quarters had seen a combined ~40% increase at prices between $125 and $164. Last quarter saw an about turn: ~17% sold at prices between $161 and $168. There was a ~15% stake increase this quarter at prices between $145 and $171. The stock is now at ~$159.

Microsoft Corporation: MSFT is a large (top five) 4.93% of the portfolio 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 first two quarters of 2015 at prices between $40 and $48. The last five quarters had seen a combined ~50% selling at prices between $43 and $58. The stock currently trades at $64.62. There was a minor ~5% increase this quarter.

Activision Blizzard: The top five ~4% ATVI position was purchased in Q2 2016 at prices between $33 and $39 and increased by two-thirds last quarter at prices between $39 and $45. There was another ~20% increase this quarter at prices between $35.50 and $45.50. The stock is now at $45.55.

Note: ATVI had a previous round trip: a ~2% position was established over Q3 & Q4 2015 but that stake was disposed in Q1 2016.

Electronic Arts (NASDAQ:EA): EA is a 3.87% of the portfolio position established in Q2 2015 and increased by just over 10 times the following quarter at prices between $63 and $75. Q4 2015 & Q1 2016 saw a combined ~80% reduction at prices between $55.50 and $77. In Q2 & Q3 2016, the position was built back up at prices between $62 and $85.50. The stock currently trades at $86.54. There was a ~9% further increase this quarter.

Equinix Inc. (NASDAQ:EQIX): EQIX is a 3.57% 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. Q1 2015 saw a ~30% reduction at prices between $217 and $239. Q4 2015 saw another ~20% reduction at prices between $265 and $305. Q1 to Q3 2016 saw another ~15% trimming. There was a minor ~6% increase this quarter. The stock is now at ~$380.

Alibaba Group Holding (NYSE:BABA): BABA is a ~3.5% of the portfolio stake established last quarter at prices between $78.50 and $110 and increased by ~50% this quarter at prices between $86.50 and $108. The stock is now at $103.

Adobe Systems (NASDAQ:ADBE): ADBE is a 2.70% 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. 2015 saw that original stake reduced by two-thirds at prices between $73 and $96. Q1 2016 saw an about turn: ~26% increase at prices between $74 and $94. The stock currently trades at ~$119. The last two quarters had seen minor trimming while this quarter saw an ~8% increase.

Visa Inc. (NYSE:V): V is a 2.67% stake purchased in Q4 2014 and Q1 2015 at prices between $51 and $68 and increased by ~31% in Q4 2015 at prices between $70 and $80. It was a fairly large ~4% stake at the time. Q1 2016 saw ~41% selling at prices between $67.50 and $77.50. That was followed with another two-thirds selling last quarter at prices between $74 and $83.50. The pattern reversed again this quarter: 180% increase at prices between $75.50 and $83. The stock currently trades at $88.43.

Shire plc (NASDAQ:SHPG): SHPG is a ~1.7% portfolio stake established in Q2 2016 at prices between $165 and $192 and reduced by one-third last quarter at prices between $184 and $207. There was a ~12% increase this quarter at prices between $164 and $198. The stock is now at $181.

Note: Part of the SHPG position came about as a result of the merger with Baxalta that closed in June 2016. It was a cash-and-stock deal with Baxalta shareholders receiving $18 in cash and 0.1482 shares of SHPG for each share of Baxalta held. Lone Pine Capital held 10.59M shares of Baxalta for which they received 1.57M shares of SHPG.

Broadcom Ltd. (NASDAQ:AVGO), Williams Companies (NYSE:WMB), and Align Technology (NASDAQ:ALGN): These positions purchased last quarter were increased this quarter. The fairly large 3.29% AVGO stake was purchased at prices between $150 and $178 and increased by just over one-third this quarter at prices between $163 and $182. The stock currently trades well above those ranges at ~$210.

The 2.65% WMB position was established at prices between $20 and $31. It saw a ~75% increase this quarter at prices between $28 and $32. The stock now goes for $27.97. ALGN is a 1.24% position purchased at prices between $81 and $96 and increased marginally this quarter. It currently trades at $103.

Kept Steady:

Amazon.com Inc.: AMZN is a top three ~5% of the portfolio position purchased in Q3 2015 at prices between $430 and $548 and increased by ~14% the following quarter at prices between $512 and $694. H1 2016 had seen a ~25% reduction at prices between $482 and $728. Last quarter saw another ~20% selling at prices between $716 and $837. The stock is now at ~$845.

Commscope Holding (NASDAQ:COMM), Barclays Bank plc Puts, ProShares Ultra VIX Short-Term Puts, and Sears Holdings (NASDAQ:SHLD) Puts: These are very small (less than ~0.75% of the portfolio each) stakes left untouched this quarter.

The spreadsheet below highlights changes to Mandel's US stock holdings in Q4 2016:

Disclosure: I am/we are long BAC, KMI, LNG, PYPL, 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.

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