Four times a year, hedge funds & asset managers with > $100 million AUM (assets under management) are required to report to the SEC their holdings from the previous quarter. I check these 13F filings quarterly just to get a sense as to where these funds are putting their money sector wise. If you just sit down and do some simple number crunching between last quarter's 13F and this quarter's 13F, you can see exactly where these funds have been moving their money.
Please note, these 13F's should be treated as a lagging indicator simply because the 13F's that were just released August 10-15th 2008 show the funds' holdings as of June 30th 2008. So, in the past month and a half, they could have completely changed their portfolio. But, at the same time, its easy to see which sectors they are flocking to. See more of my introduction to the current series here.
The Hedge Fund 13F Tracking series continues. If you've missed them, I've already covered Jeffrey Gendell's Tontine Partners here, Bret Barakett's Tremblant Capital here, Peter Thiel's Clarium Capital here, and John Griffin's Blue Ridge Capital here.
Next up, we have Lone Pine Capital, managed by Steven Mandel. Lone Pine is an $8 Billion fund that has returned over 25% annually ever since its inception in 1997. Why is Mandel worth following, you might ask? Well, he served as a consumer/retail analyst for Tiger Management back in the day for legendary investor Julian Robertson. Robertson's proteges/right-hand men have been nicknamed the "Tiger Cubs" and many have started their own funds. So, not only has Mandel learned from one of the best, but he has put up some very solid returns himself. Mandel is well versed in the ways of finding undervalued companies and his funds typically like to sniff out solid companies with good management that are trading below their intrinsic value. Just this past year 1 of his funds was up 34% before fees while another was up 32% before fees. His track record speaks for itself. And, not to mention, he learned from one of the greats in Julian Robertson. However, as I wrote about here, Lone Pine has had a rough 2008, where their Lone Cedar Fund was -5.38% year to date (as of the middle of July '08). By analyzing their 13F, maybe we'll be able to see where they are slipping up.
Once again, I'd like to give thanks to Alex Prywes for helping me gather and sort through the data of numerous hedge funds (including the one below).
The following are Lone Pine Capital's current holdings as of June 30th 2008, as released in their most recent 13F filing with the SEC. The positions in this most recent 13F were compared to last quarter's 13F and here are the changes made to their portfolio:
Entergy Corp (NYSE:ETR): 3,518,632 shares. This position is 6.06% of Lone Pine's portfolio.
Weatherford Intl (NYSE:WFT): 4,820,337 shares. This position is 3.42% of Lone Pine's portfolio.
Lorillard Inc (NYSE:LO): 3,328,911 shares. This position is 3.29% of Lone Pine's portfolio.
Amazon (NASDAQ:AMZN): 2,527,634 shares. This position is 2.65% of Lone Pine's portfolio.
Sears Holdings Corp (NASDAQ:SHLD) Puts: 1,336,800. This position is 1.41% of Lone Pine's portfolio.
America Movil (NYSE:AMX): Increased position by 39.5%. Position is now 10.74% of their portfolio.
Sandridge Energy (NYSE:SD): Increased position by 22.24%. Position is now 11.35% of their portfolio.
SAIC (SAI): Increased position by 16.38%. Position is now 2.45% of their portfolio.
Dicks Sporting Goods (NYSE:DKS): Increased position by 15.8%. Position is now 1.48% of their portfolio.
XTO Energy (XTO): Increased position by 5.41%. Position is now 8.33% of their portfolio.
CB Richard Ellis (NYSE:CBG): Reduced their position by 9.62%. Position is now 2.94% of their portfolio.
Illumina (NASDAQ:ILMN): Reduced their position by 9.97%. Position is now 2.69% of their portfolio.
Fastenal (NASDAQ:FAST): Reduced their position by 12.5%. Position is now 3.78% of their portfolio.
Qualcomm (NASDAQ:QCOM): Reduced their position by 13.88%. Position is now 7.26% of their portfolio.
Brookfield Asset Mgmt (NYSE:BAM): Reduced their position by 16.4%. Position is now 3.26% of their portfolio.
Monsanto (NYSE:MON): Reduced their position by 25.82%. Position is now 3.27% of their portfolio.
Mastercard (NYSE:MA): Reduced their position by 29%. Position is now 2.48% of their portfolio.
Priceline (NASDAQ:PCLN): Reduced their position by 30.75%. Position is now 2.34% of their portfolio.
Google (NASDAQ:GOOG): Reduced their position by 39.30%. Position is now 7.39% of their portfolio.
Infosys (NASDAQ:INFY): Reduced their position by 49.1%. Position is now 2.19% of their portfolio.
Visa (NYSE:V): Reduced their position by 57.38%. Position is now 1.93% of their portfolio.
Sears Holdings (SHLD) Puts (2nd put position): Reduced their position by 79.73%. Position is now 0.21% of their portfolio.
Removed Positions (Positions Lone Pine sold out of completely):
Brookfield Asset Management (BAM) - 2nd listed position
CME Group (NASDAQ:CME)
EMC Corp (EMC)
Southwestern Energy (NYSE:SWN)
SRA International (NYSE:SRX)
Positions with no change:
MSC Industrial Direct (NYSE:MSM). Position is 3.26% of their portfolio.
Teradata (NYSE:TDC). Position is 3.06% of their portfolio.
Eagle Materials Inc (NYSE:EXP). Position is 1.66% of their portfolio.
Bunge (NYSE:BG) Puts. Position is 0.85% of their portfolio.
Deltek (NASDAQ:PROJ). Position is 0.24% of their portfolio.
New York Times (NYSE:NYT) Puts. Position is 0.02% of their portfolio.
Top 10 holdings by % of portfolio:
1. Sandridge Energy (SD): 11.35% of the portfolio
2. America Movil (AMX): 10.74% of the portfolio
3. XTO Energy (XTO): 8.33% of the portfolio
4. Google (GOOG): 7.39% of the portfolio
5. Qualcomm (QCOM): 7.26% of the portfolio
6. Entergy (ETR): 6.06% of the portfolio (new position)
7. Fastenal (FAST): 3.78% of the portfolio
8. Weatherford Intl (WFT): 3.42% of the portfolio (new position)
9. Lorillard Inc (LO): 3.29% of the portfolio (new position)
10. Monsanto (MON): 3.27% of the portfolio
Breakdown: Well, it's very evident where Mandel & Lone Pine's poor performance is coming from. As of June 30th, they had massive holdings in natural gas and oil players Sandridge Energy (SD) and XTO Energy (XTO). SD was their top holding by % value and XTO was not far behind as their 3rd largest holding. The selloff in natural gas, oil, and all related stocks has undoubtedly affected Lone Pine in a negative way. The selloff in those names started around July, leaving Mandel a very limited window of opportunity to sell. Unfortunately, we'll have to wait until the next round of 13F's in the coming quarter to find out what Mandel has done with his large natural gas positions. Considering that the filing reports holdings as of June 30th, and the major selloff began in July, we have no idea whether Lone Pine was massively hurt by the selloff, or whether they were one of the parties responsible for the selloff. But, no matter how savvy Mandel may be, there is no way he got through July unscathed. So, that looks to be one of the main areas contributing to the lackluster performance of his Lone Cedar Fund so far in 2008.
Next, I want to highlight that Lone Pine added to their America Movil (AMX) position by 39%, nearly doubling down on their shares. Obviously, Mandel still likes the company and was using the weakness to add to his position. His addition is interesting, considering numerous hedge funds completely removed their AMX position over the past quarter, including his 'Tiger cub' buddy John Griffin over at Blue Ridge Capital. AMX has long been a hedge fund favorite and has been a top 10 holding in many prominent hedge fund portfolios over the past year. But, with the recent developments in AMX over the last few months, many hedge funds have taken action. And, unlike his colleagues, Mandel was buying the shares that other fund managers were selling off. It will be interesting to see how this continues to play out, as the once hedge fund favorite AMX may be falling out of favor with numerous managers. Lone Pine, however, was adding with conviction, making it their portfolio's 2nd largest position.
I would also like to highlight a couple of new positions started by Lone Pine this past quarter. They added Entergy (ETR) in mass, making it their 6th largest holding at 6.06% of their overall portfolio. In the past, I've talked about ETR on the blog as a way to play both the rising demand in electricity as well as the nuclear space in alternative energy. In addition to starting ETR, they started Weatherford (WFT), an equipment and service provider in the oil and natural gas spaces. They brought this position up to the fund's 8th largest holding at 3.42% of their portfolio. Additionally, they started a position in Lorillard (LO), a cigarette manufacturer. They brought this name up to the 9th largest fund holding, at 3.29% of the portfolio. Mandel added ETR, WFT, and LO all with conviction over the past quarter, landing all three as top 10 holdings.
Turning to tech, we see that Lone Pine has sizable positions in hedge fund favorites like Google (GOOG) and Qualcomm (QCOM). However, Lone Pine was selling off some of their tech holdings during the past quarter. They sold 13% of their QCOM position, leaving it as the fund's 5th largest holding. Mandel got aggressive with Google (GOOG) though, selling nearly 40% of his position. Despite the selling, it still remains their 4th largest holding. That just goes to show how large of a position he had in GOOG. Additionally, he sold completely out of Apple (AAPL). Just last quarter, it was his fund's 5th largest holding. Now, he no longer even holds a position.
Lone Pine was also busy selling the payment processors Mastercard (MA) and Visa (V). They sold 30% of their position in MA and 57% of their position in V. You can't really blame them though, as they were sitting on some handsome profits from those positions. We'll keep an eye out to see if they add back to their positions now that MA and V trade at cheaper prices than they did 2 months ago. After all, the payment processors are big hedge fund favorites, having appeared in numerous funds' portfolios.
Overall, it's easy to see where Lone Pine might be struggling this year. They've been rewarded with nice gains in some of their tech and payment processing holdings. But, those gains could have been easily nullified by the likely beating their natural gas and oil holdings took. If you are interested in further comparing Lone Pine's holdings, you can check out the analysis I did of their previous 13F here. Lastly, in a recent development, Lone Pine recently filed a 13G with the SEC, disclosing their minority stake in Hansen Natural (HANS), which I wrote about here.
And, you can view their most recent 13F as filed with the SEC here.