Cognizant Technology Solutions Corp (NASDAQ:CTSH), a $24 billion market cap IT services company, was another of Mandel’s top stock picks. In the fourth quarter of 2012, the company’s revenue was up 17% versus a year earlier and along with a generally flat net margin this caused a 16% increase in net income. Again, the stock is priced for growth given its trailing and forward P/Es of 23 and 17 respectively. Pennant Capital Management, manage by Alan Fournier, owed 1.9 million shares at the end of December according to that fund’s own 13F (research more stocks Pennant owns).
Mandel and his team were buyers of $11 billion market cap data center services company Equinix Inc (NASDAQ:EQIX), which is more of a speculative high-growth company. The stock price is up 52% in the last year, and in its most recent quarter earnings were more than double what they were in the same period in the previous year. However, earnings multiples are high and revenue growth had been a more modest 14%, leading us to be a bit skeptical of the stock on valuation. Billionaire John Paulson’s Paulson & Co. had 2.1 million shares of Equinix in its own portfolio (check out Paulson’s stock picks).
Lone Pine was also buying Verisign, Inc. (NASDAQ:VRSN), closing December with almost 15 million shares in the fund’s portfolio. Warren Buffett initiated a position in the Internet registry services company in the fourth quarter, as Berkshire Hathaway bought 3.7 million shares (see more stocks Buffett was buying). Verisign suffered a setback after increases in its prices were limited by regulators, but the company still recorded double-digit revenue growth in Q4 from its levels a year ago with earnings up sharply. At a market capitalization of $7.1 billion, Verisign is valued at 24 times trailing earnings and 18 times analyst consensus for 2014.
Disclosure: I own no shares of any stocks mentioned in this article.