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Tracking Stephen Mandel's Lone Pine Capital Portfolio - Q3 2019 Update

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Includes: ADBE, ADSK, AMZN, ATVI, BABA, BKNG, CHWY, COUP, CP, CRM, DHI, DPZ, EFX, FB, GPN, HLF, HUM, IQV, LK, LVMUY, MA, MDLA, MELI, MSFT, NFLX, NOW, SE, SHOP, SMAR, SPGI, SQ, STNE, TDG, TEAM, TIF, TWLO, UBER, UNH, UNP, WWE, WYNN
by: John Vincent
John Vincent
Long only, value, special situations, fund holdings
Summary

Stephen Mandel’s 13F portfolio value increased ~6%, from $16.08B to ~$17B. The number of positions increased from 31 to 37.

Lone Pine Capital added Netflix, Global Payments, Equifax, and Humana, while dropping Wynn Resorts.

The top three positions are Alibaba Group Holdings, Amazon.com, and UnitedHealth Group. 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 11/14/2019. 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 Q2 2019.

This quarter, Mandel’s 13F portfolio value increased ~6%, from $16.08B to $17B. The number of holdings increased from 31 to 37. The top three positions are at ~19%, while the top five are at 30% of the 13F assets: Alibaba Group Holdings (BABA), Amazon.com (AMZN), UnitedHealth Group (UNH), Adobe Systems (ADBE), and Microsoft (MSFT).

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

Netflix (NFLX), Global Payments (GPN), Equifax (EFX), and Humana Inc. (HUM): These are medium-sized new positions established this quarter. NFLX is a 3.71% of the portfolio position purchased at prices between $255 and $382, and the stock currently trades at $310. The 3.42% GPN position was established at prices between $154 and $175, and it is now at $178. EFX is a 2.54% of the portfolio stake purchased at prices between $135 and $147, and it currently goes for $138. The 2.39% HUM position was established at prices between $254 and $305, and it is now at $338.

Herbalife (HLF), Medallia Inc. (MDLA), Smartsheet (SMAR), and Twilio Inc. (TWLO): These are minutely small positions established during the quarter.

Stake Disposals

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 position was sold this quarter at prices between $102 and $141. The stock is now at ~$119.

StoneCo Ltd. (STNE): The minutely small 0.50% portfolio stake in STNE established in Q4 2018 was reduced by one-third in Q1 2019. Last quarter had seen a ~22% stake increase, but this quarter saw the stake disposed.

Stake Decreases

Adobe Systems: ADBE is a fairly large (top-five) position at 5.78% 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 ~$303. The last three quarters had seen a ~30% selling at prices between $205 and $302. There was a ~5% further trimming this quarter.

Microsoft Corporation: MSFT is currently the fifth-largest 13F position at 4.96% 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 ~$150. The last four quarters have seen a ~40% selling at prices between $98 and $141. 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.

TransDigm Group (TDG): The ~4% TDG position was purchased in Q4 2017 at prices between $256 and $285, and it is now at ~$557. Q2 2018 saw a ~25% increase at prices between $301 and $346. There was a ~20% selling this quarter at prices between $461 and $551.

Tiffany & Co. (TIF): The ~3.5% TIF position was established in Q4 2018 at prices between $74 and $128, and it now goes for ~$134. The last two quarters have seen minor trimming. Earlier this month, LVMH (OTCPK:LVMUY) agreed to acquire TIF for $135 per share cash.

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

Iqvia Holdings (IQV) (previously Quintiles IMS): The 3.12% 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 ~$144. There was a ~17% selling in Q3 2018 at prices between $100 and $130. The last two quarters have seen a two-thirds reduction at prices between $132 and $162.

Mastercard (MA): The 2.57% MA position was established in Q4 2018 at prices between $175 and $224, and it is now well above that range at ~$287. There was a ~40% selling last quarter at prices between $236 and $267. This quarter also saw a ~4% trimming.

Shopify Inc. (SHOP): The 2.53% SHOP stake was built last quarter at prices between $195 and $328, and the stock currently trades at $331. This quarter saw minor trimming.

Union Pacific Corp. (UNP): The 2.45% UNP stake was purchased in Q1 2019 at prices between $133 and $171, and increased by ~50% last quarter at prices between $164 and $179. It is now at ~$173. This quarter saw a ~50% selling at prices between $156 and $180.

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.

S&P Global Inc. (SPGI): SPGI is a medium-sized 2.49% of the portfolio position established in Q1 2019 at prices between $164 and $210. Last quarter saw a ~38% reduction at prices between $209 and $232. The stock currently trades at $262. There was an ~11% selling this quarter.

Canadian Pacific Railway (CP): The 2.45% 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 ~$236. The last four quarters have seen a combined ~55% selling at prices between $165 and $242.

Booking Holdings (BKNG): BKNG is a 2.44% of the portfolio stake purchased in Q4 2018 at prices between $1617 and $1998, and the stock currently trades at $1884. There was a one-third selling this quarter at prices between $1787 and $2077.

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.

Facebook Inc. (FB): The 2% 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. The last three quarters have seen a ~70% selling at prices between $132 and $205. The stock is now at ~$200. 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.

D. R. Horton Inc. (DHI): DHI is a 1% of the portfolio position purchased in Q1 2019 at prices between $35 and $42.50. Last quarter saw a ~90% stake increase at prices between $41.50 and $46.75. The stock currently trades at $54.85. There was a ~75% selling this quarter at prices between $43.50 and $53.

Stake Increases

Alibaba Group Holdings: BABA is a large (top-three) 7.17% 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. This quarter saw a ~25% stake increase at prices between $154 and $183. The stock is currently at $196.

Amazon.com: AMZN is a large (top-three) 6.35% 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 ~$1782. The last two quarters had seen a ~37% selling at prices between $1500 and $1922, while this quarter there was a one-third increase at prices between $1725 and $2021.

UnitedHealth Group: The large (top-five) 5.79% 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 ~$280. 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 saw another ~20% stake increase at prices between $215 and $267.

Salesforce.com (CRM): The 4.46% CRM position was increased by ~200% in Q1 2019 at prices between $130 and $167. That was followed with a ~50% stake increase last quarter at prices between $145 and $166. The stock currently trades at ~$161.

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 ~$176. There was a ~10% trimming in Q1 2019, while last quarter saw a ~15% stake increase.

Activision Blizzard (ATVI): ATVI is a 3.50% of the portfolio stake established last quarter at prices between $42 and $49.50, and the stock currently trades above that range at $54.23. This quarter saw a ~9% stake increase.

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 ~3% of the portfolio position purchased last quarter at prices between $245 and $287, and increased by ~75% this quarter at prices between $222 and $282. The stock is now at $294. Lone Pine Capital owns ~9% of the business.

ServiceNow Inc. (NOW): NOW is a 2.54% 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 had seen a ~50% selling at prices between $169 and $289. The stock is now at ~$277. There was a ~30% stake increase this quarter at prices between $250 and $302.

MercadoLibre Inc. (MELI): The MELI position was purchased in Q3 2017 at prices between $233 and $292. The position has wavered. In recent activity, Q1 2019 saw a ~50% stake increase at prices between $293 and $518. That was followed with a ~30% selling last quarter at prices between $482 and $641. The stake is now at 1.88% of the portfolio and the stock is at $580. This quarter saw a ~22% stake increase at prices between $537 and $690.

Sea Limited ADR (SE): SE is a small 1.25% portfolio position that saw an ~85% stake increase in Q1 2019 at prices between $10.75 and $24.75. Last quarter saw a ~15% trimming, while this quarter there was a similar increase. It is now at $36.57.

Square Inc. (SQ) and World Wrestling Entertainment (WWE): These two positions were first purchased in Q1 2019. SQ is a 2.92% position built last quarter at prices between $61 and $77. There was a ~140% stake increase this quarter at prices between $56.75 and $82. It is currently $66.88. The 1.24% WWE stake was built last quarter at prices between $71 and $99, and it is now at $61.52. This quarter saw a ~10% stake increase.

Chewy Inc. (CHWY), Coupa Software (COUP), and Atlassian Corp. plc (TEAM): These three positions saw significant buying this quarter. CHWY had an IPO in June. Lone Pine Capital participated in funding rounds prior to the IPO. The 0.73% CHWY position saw a ~55% stake increase this quarter at prices between $23 and $34.50. The stock is now at $23.83. They have a ~9% ownership stake in Chewy. The ~1% COUP position was purchased over the last two quarters at prices between $90 and $153, and it is now at $149. The 1.54% TEAM stake was built this quarter at prices between $122 and $147, and it is currently at $121.

Kept Steady

Uber Technologies (UBER): UBER had an IPO in June. Lone Pine Capital participated in funding rounds prior to the IPO. The 0.50% position was kept steady this quarter.

Note: Regulatory filings since the quarter ended show them owning 6.07M shares (14.5% of business) of Luckin Coffee (LK). They had an IPO in May. Shares started trading at ~$20 per share and currently go for ~$30.

The spreadsheet below highlights changes to Mandel’s 13F stock holdings in Q3 2019:

Stephen Mandel - Lone Pine Capital Q3 2019 13F Report Q/Q Comparison

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.