Tracking Stephen Mandel's Lone Pine Capital Portfolio - Q2 2019 Update

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Includes: ADBE, ADSK, AMZN, ATVI, BABA, BKNG, CHWY, COUP, CP, CRM, CSX, DHI, DPZ, FB, GOOG, GOOGL, IQV, MA, MELI, MSFT, NOW, SE, SHOP, SPGI, SQ, STNE, STZ, TDG, TEAM, TIF, TRU, UBER, UNH, UNP, WWE, WYNN
by: John Vincent
Summary

Stephen Mandel’s 13F portfolio value decreased ~6%, from $17.11B to $16.08B. The number of positions increased from 29 to 31.

Lone Pine Capital added Activision Blizzard and Domino’s Pizza, while dropping Alphabet, Constellation Brands, CSX Corp., and TransUnion.

The top three positions are Adobe Systems, Alibaba Group Holdings, and Iqvia Holdings. They add up to ~19% 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 08/14/2019. 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 Q1 2019.

This quarter, Mandel’s 13F portfolio value decreased ~6%, from $17.11B to $16.08B. The number of holdings increased from 29 to 31. The top three positions are at ~19%, while the top five are at 31% of the 13F assets: Adobe Systems (ADBE), Alibaba Group Holdings (BABA), Iqvia Holdings (IQV), Microsoft (MSFT), and UnitedHealth Group (UNH).

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.

Note: Stephen Mandel stepped down from managing investments in January in a previously announced (September 2017) move. He is still a managing director at the firm.

New Stakes

Activision Blizzard (ATVI): ATVI is a ~3% of the portfolio stake established this quarter at prices between $42 and $49.50, and the stock currently trades above that range at $50.60.

Note: ATVI had a recent round-trip: a 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 last quarter at prices between $40 and $51.

Domino’s Pizza (DPZ): DPZ is a 2.16% of the portfolio position purchased this quarter at prices between $245 and $287, and the stock is now below that range at $227. Lone Pine Capital owns ~5% of the business.

Uber Technologies (UBER), Chewy Inc. (CHWY), Coupa Software (COUP), and Atlassian Corp. plc (TEAM): These are very small (less than ~0.75% of the portfolio each) 13F stakes established during the quarter. UBER and CHWY had IPOs in June. Lone Pine Capital participated in funding rounds prior to the IPO on both these businesses. They have a 6.1% ownership stake in Chewy.

Stake Disposals

Alphabet Inc. (GOOG): GOOG was a ~3% of the portfolio position established last quarter at prices between $1016 and $1232, and disposed this quarter at prices between $1036 and $1288. The stock is now at ~$1188.

Note: GOOG has had a previous round-trip. It was a 5.47% portfolio position purchased in Q4 2017 at prices between $952 and $1077. The stake was increased by ~36% next quarter at prices between $1100 and $1270. The position was sold in Q4 2018 at prices between $976 and $1203.

Constellation Brands (STZ): STZ was 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. In recent activity, Q4 2018 saw a ~20% increase at prices between $157 and $229, while last quarter there was a ~4% trimming. The disposal this quarter was at prices between $176 and $213. The stock is now at ~$204.

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. Q3 2018 saw a ~30% selling at prices between $64 and $76, while next quarter there was a marginal increase. Last quarter saw a ~17% reduction at prices between $61 and $77. The elimination this quarter was at prices between $74 and $81. The stock is now at ~$67.02. Lone Pine Capital harvested gains.

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. 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. Q2 2018 saw a ~14% selling at prices between $55.50 and $73, and that was followed with a ~36% reduction last quarter at prices between $54 and $67. The position was disposed this quarter at prices between $63.50 and $73.50. The stock currently trades at $83.65.

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. In recent activity, Q3 2018 saw a ~20% increase at prices between $242 and $275. The stock currently trades at ~$285. The last three quarters have seen a ~30% selling at prices between $205 and $302.

Iqvia Holdings (previously Quintiles IMS): The large (top-three) ~6.19% 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 ~$155. There was a ~17% selling in Q3 2018 at prices between $100 and $130. This quarter also saw another ~20% selling at prices between $132 and $161.

Note: Mandel has a ~3% ownership stake in Iqvia Holdings.

Microsoft Corporation: MSFT is currently the fourth-largest 13F position at 6.15% 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 ~$138. The last three quarters have seen a ~45% selling at prices between $94 and $138. Lone Pine is harvesting gains.

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.

Amazon.com (AMZN): AMZN is a large 5.49% of the portfolio stake. It was established in Q4 2017 at prices between $957 and $1196. There was a ~25% selling in Q1 2018 at prices between $1189 and $1598, and that was followed with a ~40% reduction over the next two quarters at prices between $1372 and $1751. Q4 2018 saw the position doubled at prices between $1344 and $2004. The stock is now at ~$1776. The last two quarters have seen a ~37% selling at prices between $1500 and $1922.

Transdigm Group (TDG): The 4.77% TDG position was purchased in Q4 2017 at prices between $256 and $285, and it is now at ~$538. Q2 2018 saw a ~25% increase at prices between $301 and $346. This quarter saw a ~5% trimming.

Wynn Resorts (WYNN): WYNN is a ~4% position purchased in Q3 2017 at prices between $125 and $149, and reduced by ~50% the following quarter at prices between $140 and $170. The three quarters through Q4 2018 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 ~$110. For investors attempting to follow Mandel, WYNN is a good option to consider for further research. This quarter saw a ~9% trimming.

Note: Lone Pine Capital controls ~5% of the business.

Canadian Pacific Railway (CP): The ~4% 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 ~$241. The last three quarters have seen a combined ~30% selling at prices between $168 and $240.

Tiffany & Co. (TIF): The ~4% TIF position was established in Q4 2018 at prices between $74 and $128, and it now goes for ~$85. This quarter saw a ~3% trimming.

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

Facebook Inc. (FB): The 3.60% FB stake was first purchased in Q3 2014 at prices between $66 and $79. The position has wavered. In recent activity, H2 2018 had seen a stake doubling at prices between $124 and $218, while last quarter there was a ~27% selling at prices between $131 and $173. This quarter saw another ~38% selling at prices between $164 and $196. The stock is now at ~$186. Lone Pine is harvesting gains.

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.

Mastercard (MA): The 2.75% MA position was established in Q4 2018 at prices between $175 and $224, and it is now well above that range at ~$281. There was a ~40% selling this quarter at prices between $236 and $267.

S&P Global Inc. (SPGI): SPGI is a medium-sized 2.73% of the portfolio position established last quarter at prices between $164 and $210. This quarter saw a ~38% reduction at prices between $209 and $232. The stock currently trades at $260.

ServiceNow Inc. (NOW): NOW is a 2.24% 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. The last two quarters have seen a ~50% selling at prices between $169 and $289. The stock is now at ~$262.

MercadoLibre Inc. (MELI): The MELI position was purchased in Q3 2017 at prices between $233 and $292. The position has wavered. In recent activity, last quarter saw a ~50% stake increase at prices between $293 and $518. That was followed with a ~30% selling this quarter at prices between $482 and $641. The stake is now at 1.81% of the portfolio, and the stock is at $595.

Sea Limited ADR (SE): SE is a small 1.27% portfolio position that saw an ~85% stake increase last quarter at prices between $10.75 and $24.75. This quarter saw a ~15% trimming. It is now at $32.12.

Stake Increases

Alibaba Group Holdings: BABA is a large (top-three) 6.19% 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. In recent activity, Q3 2018 saw a ~50% stake increase at prices between $156 and $198, while next quarter there was a ~36% selling at prices between $131 and $164. The last two quarters have seen only minor adjustments. The stock is currently at $175.

UnitedHealth Group: The large (top-five) 5.72% 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 ~$234. There was a ~27% reduction in Q3 2018 at prices between $247 and $270, while next quarter there was ~19% increase at prices between $233 and $286. This quarter also saw a ~6% stake increase.

Union Pacific (UNP): The 5.18% UNP stake was purchased last quarter at prices between $133 and $171, and increased by ~50% this quarter at prices between $164 and $179. It is now at ~$162.

Note: UNP has seen a previous round-trip. A 2.70% of the portfolio position was purchased in Q3 2018 at prices between $138 and $165, and eliminated next quarter at prices between $128 and $165.

Autodesk Inc. (ADSK): ADSK is a ~4% portfolio stake purchased in Q4 2018 at prices between $118 and $156, and it currently trades above that at ~$143. There was a ~10% trimming last quarter, while this quarter saw a ~15% stake increase.

D.R. Horton Inc. (DHI): DHI is a 3.33% of the portfolio position purchased last quarter at prices between $35 and $42.50. This quarter saw a ~90% stake increase at prices between $41.50 and $46.75. The stock currently trades at $49.47.

Shopify Inc. (SHOP), Square Inc. (SQ), and World Wrestling Entertainment (WWE): These three positions established last quarter saw significant buying this quarter. The 2.80% SHOP stake was built at prices between $195 and $328, and the stock currently trades well above that range at $385. SQ is a 1.49% position purchased at prices between $61 and $77, and it is currently near the low end of that range at ~$62. The 1.21% WWE stake was purchased at prices between $71 and $99, and it is now near the low end of that range at $71.43.

Salesforce.com (CRM): The 2.77% CRM position was increased by ~200% last quarter at prices between $130 and $167. That was followed with a ~50% stake increase this quarter at prices between $145 and $166. The stock currently trades at ~$156.

StoneCo Ltd. (STNE): The minutely small 0.50% portfolio stake in STNE established in Q4 2018 was reduced by one-third last quarter. This quarter saw a ~22% stake increase.

Kept Steady

Booking Holdings (BKNG): BKNG is a 3.75% of the portfolio stake purchased in Q4 2018 at prices between $1617 and $1998, and the stock currently trades at $1966. There was a ~9% trimming last quarter.

Note: Booking Holdings has seen a previous round-trip. It was 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 position was disposed in Q3 2018 at prices between $1825 and $2087.

The spreadsheet below highlights changes to Mandel’s 13F stock holdings in Q2 2019:

Stephen Mandel - Lone Pine Capital

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.