Billionaire Stephen Mandel has some $17 billion in assets under management, and founded Lone Pine Capital in 1997. This Tiger cub (former Tiger Management employee) is a “bottom-up” investor with great stock-picking skills. Outlined below are some of Mandel’s most interesting moves during the first quarter (see Mandel’s top stocks).
Mandel traded out Apple Inc. (NASDAQ:AAPL) for Google Inc (NASDAQ:GOOG) last quarter. At the end of 2012, Apple was Lone Pine’s top stock holding, and now Google is on top and makes up approximately 3.7% of its portfolio.
Revenue is expected to be up 15% in 2013 and 16% in 2014 as Google Inc (NASDAQ:GOOG) maintains its strong hold in search and advertising. Google owns some 67% of the U.S. search market share, and eMarketer believes Google will own 73.7% of search ad revenue in 2013.
Google Inc (NASDAQ:GOOG)’s 2012 purchase of Motorola Mobility for $12.5 billion should help the search giant hold its market position. The Motorola purchase will hopefully protect Google’s position in mobile OS (Android) and mobile search, where the tech company will have its own hardware, and will not have to rely on other mobile phone makers.
Google Inc (NASDAQ:GOOG) has some of the highest hedge fund interest among all stocks. Going into the second quarter there were a total of 148 hedge funds long the stock, with Lone Pine Capital having the largest position in the tech giant. In second was Lansdowne Partners, with a $635 million position, making up 8.7% of its 13F portfolio (see Lansdowne’s bullish bets).
H&R Block, Inc. (NYSE:HRB) was one of Lone Pine’s big additions, now the fund’s second largest holding and making up approximately 3.4% of the portfolio. H&R Block is a major provider of tax-preparation services.
H&R Block, Inc. (NYSE:HRB) remains an income and growth play, paying investors a 2.7% dividend yield. In addition, the stock offers investors a very impressive return on equity at 37.4%. Since 2005, the company’s dividend has grown at an average annual rate of 8%, and H&R has paid dividends over the last 202 consecutive quarters.
H&R Block, Inc. (NYSE:HRB) is also cutting expenses and undergoing a restructuring, which includes reducing its workforce and cutting overhead expenses. Specifically, this includes slashing 350 positions and closing 200 under-performing offices. This will help drive the companies margins higher, with annualized savings of $85 to $100 million by the end of fiscal year 2013. Analysts expect the company to grow EPS by an annualized 12% over the next five years.