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 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.
Baidu Inc (ADR) (NASDAQ:BIDU) was the second largest long term holding of Lone Pine, despite a 14% decrease in its stake during the fourth quarter. The holding amassed 7.03 million shares valued at $1.6 billion. Baidu is a Chinese-language Internet search provider (ISP) and serves three types of online participants, which include users, customers and Baidu Union Members. The company had its debut on the U.S stock exchange in August 2005, but found its way in Lone Pine’s portfolio only during the third quarter of 2013, around the same time as Mastercard Inc (NYSE:MA). At the time, Mandel purchased some 5.29 million shares valued at $820.78 million. The stock has risen nearly 51% since then. Another significant investor of Baidu Inc (ADR) (NASDAQ:BIDU) is Philippe Laffont‘s Coatue Management owning 2.95 million shares valued at $672.69 million.
Although the company failed to meet analysts expectations in the fourth quarter as revenues of RMB 14.05 billion ($2.64 billion) missed estimates by RMB70 million and EPS of RMB9.97 ($1.61) marginally beat estimates by RMB0.02, it has strong future growth prospects. Baidu Inc (ADR) (NASDAQ:BIDU)’s spending spree on sales and marketing is to continue throughout 2015 in order to support the company’s key gateways and build its closed-loop offering. This makes the company an ideal long term investment candidate. Moreover, Baidu’s Chief Executive Officer, Robin Li has recently announced his company’s intentions to possibly unveil its self-driving car this year.
By adding some 669,000 shares of Priceline Group Inc (NASDAQ:PCLN), Mandel took the company’s stake to about 1.40 million shares valued at $1.59 billion at the end of the fourth quarter. This made the online travel company third largest holding of Lone Pine. Back in the first quarter of 2011, Mandel added the company to his portfolio by purchasing roughly 358,200 shares valued at $181.4 million. During these 3 years, Priceline Group Inc (NASDAQ:PCLN) has appreciated nearly 152%. The company’s fourth quarter EPS of $10.85 was $0.75 higher than the estimates and revenues of $1.84 billion came in $40 million higher than expected.
Among the billionaires that we track, six had investments totaling $2.70 billion in the travel company at the end of 2014. David Tepper of Appaloosa Management was one of them with about 316,900 shares valued at $361.3 million.
Disclosure: none
