Lone Pine Capital, the hedge fund managed by Tiger cub Stephen Mandel, lost about 1%* in the first half of 2014. One investor in the funds assured that this was mainly due to the fact that Lone Pine missed out on some of the year’s largest gainers amongst the activist targets, airlines and yield-driven stocks, like REITs (Institutional Investors Alpha). Let’s, thus, take a look at some of Lone Pine’s biggest losers amongst its top picks, in order to better comprehend the fund’s losses.
Even though most of Lone Pine’s top picks rose over the first six months of the year, its largest position, Cognizant Technology Solutions Corp (NASDAQ:CTSH) lost 3.13% between January and June. This $30.6 billion market cap information technology (IT), consulting and business process services provider has been quite volatile this year, trading at prices ranging from $35.00 per share to $54.00 per share. The fund has been quite impacted by this, since it owns 28.72 million shares of Cognizant Technology Solutions Corp (NASDAQ:CTSH), worth more than $1.45 billion by the end of Q1. This position accounts for roughly 6.3% of Lone Pine’s Q1 total equity portfolio.
Other hedge funds that have been affected by Cognizant Technology Solutions Corp (NASDAQ:CTSH)’s fall during the first quarter are John Armitage’s Egerton Capital Limited, which owns 3.73 million shares, and Alan Fournier’s Pennant Capital Management, which holds 3.18 million shares.
Another big loser is Lone Pine’s fifth largest equity position: Liberty Global plc – Class C Ordinary Shares (NASDAQ:LBTYK), a $23.77 billion market cap international video, broadband internet, fixed-line telephony and mobile services provider. The stock fell 49.82% in the first six months of the year, and more than 50% year-to-date. As Lone Pine owns 21.2 million shares of Liberty Global plc – Class C Ordinary Shares (NASDAQ:LBTYK), worth about $865 million by the end of Q1, which accounted for roughly 3.75% of its total portfolio, the impact on its overall results cannot be overlooked.
Once again, it was not only Mr. Mandel’s fund that took this hit. Boykin Curry’s Eagle Capital Management owns about 30.36 million shares of Liberty Global plc – Class C Ordinary Shares (NASDAQ:LBTYK), which account for more than 5% of its Q1 total equity portfolio.
The third company in this list is Dollar General Corp. (NYSE:DG), which fell 4.91% over the first half of 2014, and 8.57% year-to-date. The fund last declared ownership of 10.34 million shares of this $16.7 billion market cap discount retailer, which accounted for 2.5% of its total equity portfolio.
Other funds that saw Dollar General Corp. (NYSE:DG) decline with a certain degree of concern are Tiger Global Management Llc, which owns about 7.89 million shares, and Eric W. Mandelblatt’s Soroban Capital Partners, which held 6.75 million shares by the end of Q1. Despite this steep tumble, bulls are back at Dollar General Corp. (NYSE:DG) now, purchasing November 57.50 calls for $2.75, and selling November 62.50 calls for $1.30. “If both halves of the trade are new, the strategy was a bullish call spread with the potential to earn 245 percent from the stock rallying to $62.50 or higher on expiration,” OptionMonster explains.
* This figure corresponds to Lone Pine’s long-only funds. Its long-short equity funds were off by 1%-3%.
Disclosure: Javier Hasse holds no position in any stocks or funds mentioned