Tracking Stephen Mandel's Lone Pine Capital Portfolio - Q2 2018 Update

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Includes: ADBE, AMZN, ATVI, AVGO, BABA, BKNG, BLK, CP, CSX, DLTR, EA, EXAS, FB, FLT, GOOG, GOOGL, IQV, MELI, MHK, MSFT, NOW, NVDA, PAGS, PYPL, SBAC, SE, SQ, STZ, TDG, TMUS, TRU, TSM, UNH, WYNN
by: John Vincent

Summary

Stephen Mandel’s 13F portfolio value decreased ~4% from $19.74B to $18.91B. The number of positions decreased from 30 to 28.

Lone Pine Capital decreased Adobe Systems and Facebook, while dropping BlackRock, Broadcom, and Taiwan Semiconductor Manufacturing during the quarter.

The top three positions are Microsoft, Alibaba, and Activision Blizzard, and they add up to ~18.5% of the portfolio.

This article is part of a series that provides an ongoing analysis of the changes made to Stephen Mandel’s 13F portfolio on a quarterly basis. It is based on Mandel’s regulatory 13F Form filed on 08/14/2018. 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 Q1 2018.

This quarter, Mandel’s 13F portfolio value decreased ~4% from $19.74B to $18.91B. The number of holdings decreased from 30 to 28. The top three positions are at ~18.5%, while the top five are at ~30% of the 13F assets: Microsoft (NASDAQ:MSFT), Alibaba Group Holdings (NYSE:BABA), Activision Blizzard (NASDAQ:ATVI), Adobe Systems (NASDAQ:ADBE), and Booking Holdings (NASDAQ:BKNG).

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.

New Stakes

Canadian Pacific Railway (NYSE:CP) and Nvidia Corp. (NASDAQ:NVDA): These are two medium-sized new positions this quarter. The 2.77% CP stake was established at prices between $173 and $195, and it currently trades well above that range at $211. NVDA is a 2.67% position purchased at prices between $214 and $267, and it is now above that range at $281.

Mohawk Industries (NYSE:MHK): MHK is a very small 0.54% portfolio stake purchased this quarter at prices between $204 and $246. The stock is now below that range at $192.

Stake Disposals

BlackRock Inc. (NYSE:BLK): The ~2.5% BLK stake was established in Q4 2017 at prices between $447 and $519. Last quarter saw a ~17% selling at prices between $509 and $593, and the elimination this quarter was at prices between $492 and $552. The stock is currently at $479.

Broadcom Ltd. (NASDAQ:AVGO): The 3.27% AVGO stake was purchased in Q3 2016 at prices between $150 and $178 and increased by just over one-third the following quarter at prices between $163 and $182. There was a ~50% stake increase in Q1 2017 at prices between $174 and $227. Q4 2017 saw an about-turn: a ~50% selling at prices between $239 and $285. The remaining position was disposed this quarter at prices between $225 and $270. The stock currently trades at ~$219.

Taiwan Semiconductor Manufacturing Company (NYSE:TSM): The 2.74% TSM stake was purchased last quarter at prices between $40 and $46 and sold out this quarter at prices between $35.50 and $44. It is currently at $43.60.

T-Mobile US (NASDAQ:TMUS) and Exact Sciences (NASDAQ:EXAS): These are very small (less than ~1% of the portfolio each) stakes established last quarter but disposed this quarter.

Stake Decreases

Activision Blizzard: The large (top-three) ~5.75% ATVI position was purchased in Q2 2016 at prices between $33 and $39 and built over the next three quarters at prices between $35.50 and $50. The stock is now at $72.10. There was a ~42% reduction over the last five quarters at prices between $48 and $78.

Note: ATVI had a previous round-trip: a ~2% position was established in H2 2015 and disposed in Q1 2016.

Adobe Systems: ADBE is a large (top-five) ~5.75% of the 13F 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. The position has since wavered. Among recent activity, Q4 2017 saw a ~50% increase at prices between $148 and $185, while this quarter there was a ~20% reduction at prices between $212 and $258. The stock currently trades at ~$264.

UnitedHealth Group (NYSE:UNH): The 5.35% UNH stake was established in Q2 2017 at prices between $164 and $187 and increased by ~160% the following quarter at prices between $185 and $200. The stock is now well above those ranges at ~$269. There was a ~17% trimming in Q4 2017, while last quarter saw a similar increase. This quarter saw a ~3% trimming.

Electronic Arts (NASDAQ:EA): The 4.71% EA position was purchased in Q3 2017 at prices between $105 and $122 and increased by ~75% the following quarter at prices between $101 and $120. It is now at ~$113. There was a ~12% selling this quarter at prices between $117 and $147.

Constellation Brands (NYSE:STZ): STZ is a 4.49% 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. Q3 2016 saw an about-turn: ~17% sold at prices between $161 and $168. The next two quarters saw a one-third increase at prices between $145 and $171. The stock is now at ~$208. There was a roughly one-third reduction in Q4 2017 at prices between $199 and $229, and that was followed with a ~20% selling this quarter at prices between $216 and $234. Mandel is realizing gains.

CSX Corporation (NYSE:CSX): The 4.45% CSX stake was established in Q4 2017 at prices between $48.50 and $58 and increased by ~17% last quarter at prices between $50.50 and $59.50. The stock is now at $74.16. This quarter saw marginal trimming.

Note: CSX is back in the portfolio after a quarter’s gap. A 2.86% CSX stake was purchased in Q1 2017 at prices between $36 and $50. The following quarter saw a ~28% reduction at prices between $46 and $55. It was eliminated last quarter at prices between $48 and $55.

TransUnion (NYSE:TRU): The 3.84% TRU position was purchased in Q2 2017 at prices between $38 and $49.50. The stock is now well above that range at $75.30. This quarter saw a ~14% selling at prices between $55.50 and $73.

Note: Lone Pine Capital has a ~6% ownership stake in TransUnion.

Amazon.com (NASDAQ:AMZN): AMZN is a fairly large ~4% of the portfolio stake established in Q4 2017 at prices between $957 and $1196. The stock is now well above that range at $2013. There was a ~25% selling last quarter at prices between $1189 and $1598, and that was followed with a similar reduction this quarter at prices between $1372 and $1751. Mandel is harvesting gains.

Facebook Inc. (NASDAQ:FB): The 3.50% FB stake was first 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. There was a ~45% selling in Q3 2016 at prices between $114 and $131. The position had wavered since. Last quarter saw a ~75% stake increase at prices between $152 and $193, while this quarter there was a ~56% reduction at prices between $155 and $202. The stock is now at $176.

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.

PayPal Holdings (NASDAQ:PYPL): PYPL is a 2.78% position established in Q3 2017 at prices between $53 and $65 and increased by ~40% the following quarter at prices between $64 and $79. Last quarter had also seen a ~12% increase. This quarter saw an about-turn: ~40% selling at prices between $71.50 and $86. It currently goes for $92.33.

FleetCor Technologies (NYSE:FLT): The very small ~1% FLT stake saw a ~12% trimming this quarter.

Stake Increases

Microsoft Corporation: MSFT is currently the largest 13F position at 6.52% of the portfolio. It was established in Q2 2017 at prices between $65 and $72.50. There was a ~15% trimming in Q4 2017 at prices between $74 and $87, while last quarter saw a ~26% increase at prices between $85 and $97. The stock is now at $112. This quarter saw a ~4% increase.

Note: MSFT has had a previous round-trip: It was a large (top-five) 4.93% of the portfolio position in Q4 2016. The bulk of the position was from H1 2015 at prices between $40 and $48. The five quarters through Q3 2016 had seen a combined ~50% selling at prices between $43 and $58. The elimination in Q1 2017 happened at prices between $62 and $66.

Alibaba Group Holdings: The large (top-three) 6.27% BABA stake was established in Q3 2016 at prices between $78.50 and $110 and increased by ~50% the following quarter at prices between $86.50 and $108. There was another ~50% increase in H1 2017 at prices between $88.50 and $144. Q3 2017 saw the pattern reverse: a ~25% reduction at prices between $141 and $180, and that was followed with a similar reduction in Q4 2017 at prices between $169 and $191. The stock is now at $175. There was a ~6% trimming last quarter, while this quarter there was a similar increase.

Booking Holdings: BKNG is a large 5.69% portfolio position established in Q3 2017 at prices between $1790 and $2049 and increased by roughly one-third the following quarter at prices between $1646 and $1942. The stock currently trades at $1952. There was an ~8% trimming last quarter, while this quarter saw a ~5% increase.

IQVIA Holdings (NYSE:IQV) (previously Quintiles IMS): The ~5% IQV stake was purchased in Q1 2017 at prices between $75 and $82.50 and increased by ~70% the following quarter at prices between $78 and $91. The stock is now at ~$127. There were minor increases in the last two quarters.

Note: Lone Pine Capital has a ~5% ownership stake in the business.

Alphabet Inc. (NASDAQ:GOOG): GOOG is a 3.88% portfolio position purchased in Q4 2017 at prices between $952 and $1077, and it is now at $1218. There was an ~8% increase last quarter, and that was followed with a marginal increase this quarter.

Mercadolibre Inc. (NASDAQ:MELI) and Wynn Resorts (NASDAQ:WYNN): The 3.43% MELI position was purchased in Q3 2017 at prices between $233 and $292. This quarter saw a one-third increase at prices between $285 and $355. The stock is now at ~$342. WYNN is a 3.36% position purchased in Q3 2017 at prices between $125 and $149 and reduced by ~50% the following quarter at prices between $140 and $170. Last quarter saw a ~78% stake increase at prices between $162 and $201, and that was followed with a ~68% increase this quarter at prices between $161 and $202. The stock is now at ~$148. For investors attempting to follow Mandel, these two are good options to consider for further research.

Dollar Tree (NASDAQ:DLTR) and SBA Communications (NASDAQ:SBAC): These two medium-sized positions established last quarter saw increases this quarter. The 3.25% DLTR stake was purchased at prices between $89 and $116, and the stock currently trades below that range at $80.51. This quarter saw a ~14% stake increase. SBAC is a ~3% portfolio position established at prices between $153 and $175, and the stock is now near the low end of that range at $155. This quarter saw a ~4% increase. For investors attempting to follow Mandel, these two are good options to consider for further research.

Transdigm Group (NYSE:TDG): The ~2% TDG position was purchased in Q4 2017 at prices between $256 and $285, and it is now at $350. This quarter saw a ~25% increase at prices between $301 and $346.

ServiceNow Inc. (NYSE:NOW): NOW is a 2.75% stake established in Q2 2017 at prices between $84.50 and $118. Q4 2017 saw a ~22% reduction at prices between $113 and $131. There was another one-third reduction last quarter at prices between $132 and $175. It now goes for $196. This quarter saw a ~13% increase.

PagSeguro Digital (NYSE:PAGS): The minutely small 0.47% PAGS stake saw a ~75% increase this quarter.

Kept Steady

Square Inc. (NYSE:SQ) and Sea Limited ADR (NYSE:SE): These are very small (less than ~1% of the portfolio each) positions kept steady this quarter.

The spreadsheet below highlights changes to Mandel’s 13F stock holdings in Q2 2018:

Stephen Mandel - Lone Pine Capital - Q2 2018 13F Report

Disclosure: I am/we are long BABA.

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.