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Priceline Group Inc (PCLN), Mastercard Inc (MA), Baidu Inc (ADR) (BIDU): Stephen Mandel’s Bottom-Up Picks

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Stephen Mandel of Lone Pine Capital recently disclosed his equity portfolio in a 13F filing with the Securities and Exchange Comission. We sifted through this and the previous filings to jot down his long-term investment picks. Baidu Inc (ADR) (NASDAQ:BIDU), Mastercard Inc (NYSE:MA) and Priceline Group Inc (NASDAQ:PCLN) were at the top of this list, and were also among the top 5 holdings of the hedge fund as of the end of 2014. A pertinent question for any investor is, how much can one save by following the top picks of hedge funds without actually investing in one? Our research has shown that on average these funds charge about 35% of all profits as fees. That is a staggering figure, especially when one can invest in the best ideas of these fund managers without losing a dime.

Lone Pine Capital 2014 Q3 Investor Letter

Lone Pine Capital was established in 1997, after Stephen Mandel’s tenure with the legendary investor Julian Robertson came to an end. He is one of the most successful of the Tiger cubs, a term used for Tiger Management’s past employees who not only had the blessings of Robertson, but also share ownership of their fund with him. One of Mandel’s biggest wins has been his investment in the search giant, Google Inc (NASDAQ:GOOGL). In 2005 he made at least $500 million on his investment in the company, which was also his second largest holding at the end of that year. His fervor for technology stocks is still in place, since even today 44% of the fund’s holdings are in information technology. Mandel is a proponent of bottom-up approach, when it comes to stock picking. He pays more attention to the fundamentals of companies and their management instead of the wider macroeconomic factors, when he is looking for companies that are selling below their intrinsic value. Market Value of Lone Pine’s portfolio stood at $23.85 billion towards the end of 2014.

Lone Pine’s stake in Mastercard Inc (NYSE:MA) represents 7.24% of the fund’s equity portfolio. Mandel increased his exposure to the technology company in the global payments industry by 32% during the fourth quarter to 20.03 million shares valued at $1.73 billion. Mastercard Inc (NYSE:MA) was added to Lone Pine’s portfolio during the third quarter of 2013 when 7.0 million shares valued at $471.59 million were purchased. The stock has appreciated by some 28% since then. During the fourth quarter, the popularity of the company has also increased among more than 700 hedge funds that we track. At the end of 2014, a total of 91 funds held long positions in Mastercard, with an aggregate investment of $8.36 billion, versus 81 firms with $7.1 billion a quarter earlier. One of these funds was Tom Russo’s Gardner Russo & Gardner, which  had 9.98 million shares valued at $860.07.

Mastercard Inc (NYSE:MA)’s fourth quarter financial results were slightly higher than anticipated as Earnings per Share (EPS) of $0.69 beat estimates by $0.02 and revenues of $2.42 billion were also $30 million higher than expected. One of the highlights of the quarter was the 20.3% effective tax rate that the company paid as opposed to 32.0% a year ago.

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