Tracking Stephen Mandel's Lone Pine Capital Portfolio - Q1 2019 Update

Summary

• Stephen Mandel’s 13F portfolio value increased ~16% from $14.77B to $17.11B. The number of positions increased from 25 to 29.
• Lone Pine Capital added S&P Global, Union Pacific, and Alphabet while dropping Activision Blizzard and PayPal Holdings.
• The top three positions are Adobe Systems, Amazon.com, and Iqvia Holdings. They add up to ~20% 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 05/15/2019. 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 Q4 2018.

This quarter, Mandel's 13F portfolio value increased ~16% from $14.77B to $17.11B. The number of holdings increased from 25 to 29. The top three positions are at ~20% while the top five are at one-third of the 13F assets: Adobe Systems (ADBE), Amazon.com (AMZN), Iqvia Holdings (IQV), Microsoft (MSFT), and Alibaba Group Holdings (BABA).

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

S&P Global Inc. (SPGI): SPGI is a medium-sized 3.80% of the portfolio position established this quarter at prices between $164 and $210. The stock currently trades well above that range at ~$225.

Union Pacific (UNP): The 3.24% UNP stake was purchased at prices between $133 and $171 and it is now just above that range at ~$172.

Note: UNP is back in the portfolio after a quarter's gap. A 2.70% of the portfolio position was purchased in Q3 2018 at prices between $138 and $165 and eliminated last quarter at prices between $128 and $165.

Alphabet Inc. (GOOG) (GOOGL): GOOG is a ~3% of the portfolio position established this quarter at prices between $1,016 and $1,232 and the stock is now at ~$1066.

Note: GOOG is back in the portfolio after a quarter's gap. It was a 5.47% portfolio position purchased in Q4 2017 at prices between $952 and $1,077. The stake was increased by ~36% next quarter at prices between $1,100 and $1,270. The position was sold last quarter at prices between $976 and $1,203.

D.R. Horton Inc. (DHI): DHI is a small 1.59% of the portfolio position purchased this quarter at prices between $35 and $42.50. The stock currently trades above that range at $45.60.

World Wrestling Entertainment (WWE), Square Inc. (SQ), and Shopify Inc. (SHOP): These minutely small (less than ~0.1% of the portfolio each) stakes were established during the quarter.

Note: Regulatory filings since the quarter ended show the fund owning 2.26M shares (5.1% of business) of World Wrestling Entertainment. This is compared to 157K shares in the 13F Report.

Stake Disposals

Activision Blizzard (ATVI): The fairly large 4.94% 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 entire stake was disposed this quarter at prices between $40 and $51. The stock is now at $45.38.

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

PayPal Holdings (PYPL): PYPL was a 3.28% position established in Q3 2017 at prices between $53 and $65 and increased by ~40% the following quarter at prices between $64 and $79. Q2 2018 saw an about turn: ~40% selling at prices between $71.50 and $86. Last two quarters had also seen minor selling. The elimination this quarter was at prices between $82 and $104. The stock is now at ~$114.

NIO Inc. (NIO): NIO was a minutely small 0.14% of the portfolio stake disposed during the quarter.

Stake Decreases

Adobe Systems: ADBE is currently the largest 13F position at ~7% of the portfolio. 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 next quarter there was a ~20% reduction at prices between $212 and $258. Q3 2018 saw a similar increase at prices between $242 and $275. The stock currently trades at ~$278. There was a ~5% trimming last quarter and that was followed with a ~12% selling this quarter.

Amazon.com: AMZN is now a top three 6.78% of the portfolio stake. It was established in Q4 2017 at prices between $957 and $1,196. 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 next two quarters at prices between $1,372 and $1,751. Last quarter saw the position doubled at prices between $1,344 and $2,004. The stock is now at ~$1,804. There was a ~12% trimming this quarter.

Microsoft Corporation: MSFT is currently the fourth-largest 13F position at 6.23% 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 ~$131. Last two quarters have seen a one-third selling at prices between $94 and $120.

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: BABA is a large (top five) ~6% of the portfolio stake 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 ~$154. Q3 2018 saw a ~50% increase at prices between $156 and $198 while last quarter there was a ~36% selling at prices between $131 and $164. This quarter also saw a ~9% trimming.

Constellation Brands (STZ): STZ is a large ~5% 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: Last quarter saw a ~20% increase at prices between $157 and $229 while this quarter there was a ~4% trimming. The stock is now at ~$188.

Facebook Inc. (FB): The 4.72% 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 next quarter there was a ~56% reduction at prices between $155 and $202. Last two quarters had seen a stake doubling at prices between $124 and $218 while this quarter there was a ~27% selling at prices between $131 and $173. The stock is now at ~$173.

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 in 2013 and early 2014 at much higher prices realizing huge gains.

Canadian Pacific Railway (CP): The 4.25% CP stake was established in Q2 2018 at prices between $173 and $195 and increased by ~35% next quarter at prices between $178 and $216. It currently trades at ~$234. Last two quarters have seen a combined ~20% selling at prices between $168 and $223.

Booking Holdings (BKNG), Mastercard (MA), and Autodesk Inc. (ADSK): These medium-sized positions established last quarter were reduced this quarter. BKNG is a 3.28% of the portfolio stake purchased at prices between $1,617 and $1,998 and the stock currently trades at $1,778. There was a ~9% trimming this quarter. The 3.84% MA position was established at prices between $175 and $224, and it is now well above that range at ~$266. This quarter saw a ~5% trimming. ADSK is a 3.13% portfolio stake purchased at prices between $118 and $156, and it currently trades above that at ~$165. There was a ~10% trimming this quarter.

Note: Booking Holdings has seen a previous roundtrip. It 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 in Q3 2018 at prices between $1,825 and $2,087.

CSX Corporation (CSX): The 3.50% 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 ~$78. Q3 2018 saw a ~30% selling at prices between $64 and $76 while last quarter there was a marginal increase. This quarter saw a ~17% reduction at prices between $61 and $77.

Note: CSX has had a previous roundtrip. 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. The remaining stake was eliminated next quarter at prices between $48 and $55.

TransUnion (TRU): The 2.51% TRU position was purchased in Q2 2017 at prices between $38 and $49.50. The stock is now well above that range at $69.58. Q2 2018 saw a ~14% selling at prices between $55.50 and $73 and that was followed with a ~36% reduction this quarter at prices between $54 and $67.

ServiceNow Inc. (NOW): NOW is a 2.46% 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. The position had since wavered. This quarter saw a one-third selling at prices between $169 and $251. The stock is now at ~$275.

StoneCo Ltd. (STNE): The minutely small 0.50% portfolio stake in STNE established last quarter was reduced by one-third this quarter.

Stake Increases

TransDigm Group (TDG): The 4.41% TDG position was purchased in Q4 2017 at prices between $256 and $285 and it is now at ~$469. Q2 2018 saw a ~25% increase at prices between $301 and $346. There was a ~14% selling last quarter while this quarter saw a ~9% stake increase.

MercadoLibre Inc. (MELI): The MELI position was purchased in Q3 2017 at prices between $233 and $292. Q2 2018 saw a one-third increase at prices between $285 and $355. At the time, it was a medium-sized ~3.5% stake. Next quarter saw a ~18% trimming at prices between $295 and $385 and that was followed with a ~75% selling last quarter at prices between $258 and $370. The stock is now at ~$605. The position was increased by ~50% this quarter at prices between $293 and $518. The stake is now at ~2% of the portfolio.

Salesforce.com (CRM) and Sea Limited ADR (SE): These two stakes saw large increases this quarter. The CRM position was increased by ~200% to a 1.81% portfolio stake at prices between $130 and $167. The stock currently trades at ~$161. SE is a 1% portfolio position that saw a ~85% stake increase during the quarter at prices between $10.75 and $24.75. It is now at $30.85.

Kept Steady

Iqvia Holdings (IQV) previously Quintiles IMS: The large (top three) ~6.50% 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 ~$139. There was a ~17% selling in Q3 2018 at prices between $100 and $130 and that was followed with a ~8% trimming last quarter.

Note: Mandel has a 3.8% ownership stake in Iqvia Holdings.

UnitedHealth Group (UNH): The large 5.17% 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 at ~$247. There was a ~27% reduction in Q3 2018 at prices between $247 and $270 while last quarter there was ~19% increase at prices between $233 and $286.

Tiffany & Co. (TIF): The 4.18% TIF position was established at prices between $74 and $128 and it now goes for $90.47.

Note: Lone Pine Capital has a 5.5% ownership stake in Tiffany & Company.

Wynn Resorts (WYNN): WYNN is a 4.15% 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 had seen a ~470% increase at prices between $125 and $201. The stock is now below the low end of their purchase price ranges at ~$111. 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.

The spreadsheet below highlights changes to Mandel's 13F stock holdings in Q1 2019:

Analyst’s 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.