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Billionaire Stephen Mandel’s Top Picks: Priceline Group Inc (PCLN), JD.Com Inc (ADR) (JD), Mastercard Inc (MA) & Valeant Pharmaceuticals Intl Inc (VRX)

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Billionaire Stephen Mandel’s Lone Pine Capital has recently disclosed its equity portfolio in its latest 13F filing with the U.S. Securities and Exchange Commission for the end of the first quarter of 2015. Mr. Mandel is a bottom-up investor with great stock picking skills. He established Lone Pine Capital in 1997, after leaving the legendary investor Julian Robertson. Mr. Mandel is one of the most successful of the Tiger cubs, a term used for Tiger Management’s past employees and funds that have been seeded by Robertson. Lone Pine Capital is a classic long/short equity hedge fund, with $17 billion in assets under management (AUM). In its 13F, Lone Pine Capital revealed a total of 54 positions, with a reported value of $26.4 billion. The fund mainly focuses on technology and consumer stocks and its top holdings, in terms of value, are represented by Priceline Group Inc (NASDAQ:PCLN), JD.Com Inc (ADR)(NASDAQ:JD), Mastercard Inc (NYSE:MA), and Valeant Pharmaceuticals Intl Inc (NYSE:VRX).

Lone Pine Capital 2014 Q3 Investor Letter

We track the latest moves of more than 700 other hedge funds to learn about their ideas. Many think that 13F filings are not helpful to find any investment opportunities because of the maximum 45-day delay during each filing period. However, our research has shown that imitating a portfolio of the 15 most popular small-cap picks among these professional investors can generate an average return of nearly one percentage point in excess of the S&P 500 Total Return Index’s monthly return. Moreover, these picks generated an alpha of around 80 basis points per month. By comparison, the 50 most popular stocks among hedge funds overall (which are mostly large- and mega-cap companies) had a monthly alpha of six basis points and underperformed the market by around seven basis points per month. Our small-cap strategy has returned 139% in the last 2.5+ years since we started tracking it in real time in August 2012, beating the S&P 500 ETF (SPY) by over 80 percentage points (read more details here).

Lone Pine Capital’s top holding is represented by Priceline Group Inc (NASDAQ:PCLN), a $63-billion market cap provider of online travel and related services. Lone Pine Capital disclosed ownership of 1.33 million shares, down from 1.40 million shares previously held by the fund. The stake is valued at $1.5 billion. During the past calendar year, Priceline Group Inc (NASDAQ:PCLN)’s stock lost 2.34% On the other hand, the stock gained 5.18% year-to-date (YTD). For the first quarter of 2015, Priceline posted net income of $8.12 per diluted share, up from $7.81 in 2014. The company’s gross travel bookings stood at $13.8 billion, up by 12% compared to the same period a year ago. Other investors that see value in Priceline Group Inc (NASDAQ:PCLN) include Eric W. Mandelblatt’s Soroban Capital Partners, which held 520,610 shares of the company at the end of the first quarter.

The second position is held by JD.Com Inc (ADR) (NASDAQ:JD), in which Lone Pine Capital boosted its stake by over 300% to 38.53 million shares from 8.82 million shares held previously. The stake is valued at $1.13 billion. JD.Com is an e-commerce company engaged in online direct sales, and has a market cap of $47.24 billion. The company’s stock rose by 61.39% during the past year, plus 26.75% during the first quarter of 2015. JD.Com is planning to invest about $168 million to acquire a 10% stake in Kingdee International Software Group, an e-commerce company headquartered in Shenzhen, China. JD.Com Inc (ADR) (NASDAQ:JD) also announced its plans to invest $350 million in Tuniu Corp., an online leisure travel company in China. This investment will make JD the largest shareholder of, with a 27.50% stake. Moore Global Investments, led by billionaire Louis Bacon, was also bullish on JD.Com Inc (ADR) (NASDAQ:JD) during the first quarter, boosting its position in the company to 2.17 million shares from 200,000 shares.

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