Tracking Stephen Mandel's Lone Pine Capital Portfolio - Q3 2018 Update

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Includes: ADBE, AMZN, ATVI, BABA, BKNG, CP, CSX, DLTR, EA, FB, FDC, FLT, GOOG, IQV, MELI, MHK, MSFT, NIO, NOW, NVDA, PAGS, PYPL, SBAC, SE, SQ, STZ, TDG, TRU, UNH, UNP, WYNN
by: John Vincent
Summary

Stephen Mandel’s 13F portfolio value increased ~3% from $18.91B to $19.44B. The number of positions decreased from 28 to 25.

Lone Pine Capital increased Alibaba and Wynn Resorts while dropping Booking Holdings, Dollar Tree, and SBA Communications.

The top three positions are Alibaba, Microsoft, and Adobe Systems, and they add up to ~24% 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 11/14/2018. 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 Q2 2018.

This quarter, Mandel’s 13F portfolio value increased ~3% from $18.91B to $19.44B. The number of holdings decreased from 28 to 25. The top three positions are at ~24% while the top five are at ~36% of the 13F assets: Alibaba Group Holding, Microsoft, Adobe Systems, Activision Blizzard, and IQVIA Holdings.

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:

First Data Corp. (FDC), Union Pacific (UNP), and NIO (NIO): These are the new positions this quarter. FDC is a medium-sized 2.76% portfolio stake established at prices between $21 and $26 and the stock currently trades below that range at $17.45. The 2.70% UNP position was purchased at prices between $138 and $165 and it now goes for $144. NIO is a minutely small 0.09% stake.

Stake Disposals:

Booking Holdings (BKNG): BKNG was a large 5.69% portfolio position established in Q3 2017 at prices between $1,790 and $2,049 and increased by roughly one-third the following quarter at prices between $1,646 and $1,942. The position was disposed this quarter at prices between $1,825 and $2,087. The stock currently trades at $1,764.

Dollar Tree (DLTR) and SBA Communications (SBAC): These two medium-sized positions established in Q1 2018 and increased last quarter were eliminated this quarter. The 3.25% DLTR stake was purchased at prices between $89 and $116 and disposed at prices between $80 and $96. The stock currently trades at $83.01. SBAC was a ~3% portfolio position established at prices between $153 and $175 and disposed at prices between $154 and $166. The stock is now at $166.

Mohawk Industries (MHK), PagSeguro Digital (PAGS), and Square Inc. (SQ): These very small (less than ~1% of the portfolio each) stakes were sold this quarter.

Stake Decreases:

IQVIA Holdings (IQV) previously Quintiles IMS: The large (top five) ~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 ~$118. There was a ~17% selling this quarter at prices between $100 and $130.

UnitedHealth Group (UNH): The 4.13% 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 ~$262. There was a ~27% reduction this quarter at prices between $247 and $270.

TransUnion (TRU): The 3.72% TRU position was purchased in Q2 2017 at prices between $38 and $49.50. The stock is now well above that range at $60.67. Last quarter saw a ~14% selling at prices between $55.50 and $73 and that was followed with a ~3% trimming this quarter.

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

Amazon.com (AMZN): AMZN is a 3.59% of the portfolio stake established in Q4 2017 at prices between $957 and $1196. The stock is now well above that range at $1502. There was a ~25% selling in Q1 2018 at prices between $1,189 and $1,598 and that was followed with a ~40% reduction over the last two quarters at prices between $1,372 and $1,751. Mandel is harvesting gains.

CSX Corporation (CSX): The 3.59% CSX stake was established in Q4 2017 at prices between $48.50 and $58 and increased by ~17% next quarter at prices between $50.50 and $59.50. The stock is now at ~$70. This quarter saw a ~30% selling at prices between $64 and $76.

Note: CSX has had a previous round-trip. 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 was at prices between $48 and $55.

MercadoLibre Inc. (MELI): The 3.13% MELI position was purchased in Q3 2017 at prices between $233 and $292. Last quarter saw a one-third increase at prices between $285 and $355 while this quarter there was an ~18% selling at prices between $295 and $385. The stock is now at ~$310.

PayPal Holdings (PYPL): PYPL is a 2.69% 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 saw an about turn: ~40% selling at prices between $71.50 and $86. That was followed with a ~6% trimming this quarter. It currently goes for ~$78.

FleetCor Technologies (FLT): The very small 0.59% FLT stake saw a ~55% reduction over the last two quarters at prices between $196 and $228. The stock is currently at $184.

Stake Increases:

Alibaba Group Holding (BABA): BABA is now the largest position at 8.25% of the portfolio. The 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. Next quarter saw a reversal: ~45% selling at prices between $141 and $191. The stock is now at ~$150. This quarter saw a ~50% increase at prices between $156 and $198.

Microsoft Corporation (MSFT): MSFT is currently the second-largest 13F position at ~8% 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 next quarter saw a ~26% increase at prices between $85 and $97. The stock is now at $103. This quarter saw a ~10% 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.

Adobe Systems (ADBE): ADBE is a large (top five) 7.53% 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. Recent activity follow: Q4 2017 saw a ~50% increase at prices between $148 and $185 while last quarter there was a ~20% reduction at prices between $212 and $258. This quarter saw a similar increase at prices between $242 and $275. The stock currently trades at ~$226.

Activision Blizzard (ATVI): The large (top five) 6.91% 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 $50.05. There was a ~42% reduction over the last five quarters at prices between $48 and $78. This quarter saw a ~13% increase.

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

Alphabet Inc. (GOOG) (NASDAQ:GOOGL): GOOG is a 5.47% portfolio position purchased in Q4 2017 at prices between $952 and $1077 and it is now at $1,024. This quarter saw a ~36% increase at prices between $1,100 and $1,270.

Electronic Arts (EA): The 4.87% 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 well below those ranges at ~$82.67. There was a ~12% selling last quarter at prices between $117 and $147 while this quarter saw a ~24% increase at prices between $112 and $149.

Constellation Brands (STZ): STZ is a 4.78% 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. The position has wavered. Recent activity follow: there was an ~11% reduction in the two quarters at prices between $199 and $234 while this quarter saw a similar increase at prices between $200 and $222. The stock is now at $193.

Canadian Pacific Railway (CP) and Nvidia Corp. (NVDA): These two positions established last quarter were increased this quarter. The 4.25% CP stake was established at prices between $173 and $195 and increased by ~36% this quarter at prices between $178 and $216. It currently trades at ~$203. NVDA is a 3.23% position purchased at prices between $214 and $267 and it is now well below that range at $145. There was a ~5% increase this quarter.

Wynn Resorts (WYNN): WYNN is a 3.89% 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 three quarters have seen a ~470% increase at prices between $125 and $201. The stock is now below their purchase price ranges at ~$104. For investors attempting to follow Mandel, WYNN is a good option to consider for further research.

Note: Lone Pine Capital controls 5.4% of the business.

TransDigm Group (TDG): The 3.38% TDG position was purchased in Q4 2017 at prices between $256 and $285 and it is now at $341. Last quarter saw a ~25% increase at prices between $301 and $346. There was a marginal increase this quarter.

Facebook Inc. (FB): The 3.27% FB stake was first purchased in Q3 2014 at prices between $66 and $79. The position has wavered. Recent activity follow: Q1 2018 saw a ~75% stake increase at prices between $152 and $193 while last quarter there was a ~56% reduction at prices between $155 and $202. The stock is now at $132. There was a ~14% increase this quarter.

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.

ServiceNow Inc. (NOW): NOW is a 3.19% 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 next quarter at prices between $132 and $175. It now goes for ~$161. Last two quarters have seen a combined ~18% increase at prices between $158 and $205.

Kept Steady:

Sea Limited ADR (SE): The minutely small 0.28% SE stake was kept steady this quarter.

The spreadsheet below highlights changes to Mandel’s 13F stock holdings in Q3 2018:

Stephen Mandel - Lone Pine Capital - Q3 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.