Billionaire Stephen Mandel of Lone Pine Capital outperformed the market during the first quarter, with 43 stocks with a market cap of over $1.0 billion in which the investor reported long positions in its last 13F filing, posting an average return of 6%. Almost half of Mandel’s portfolio lies in the technology sector and his methodology still surpassed the tech-heavy NASDAQ by some 2.5 percentage points. Let’s look at some of the main causes of this outperformance by taking a closer look at some stocks in which Mandel owns large stakes, but which also had some significant returns during the first three months of 2015.
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The stock of Priceline Group Inc (NASDAQ:PCLN) is the best performing among all three companies in which Mandel owns largest long positions as of the end of 2014. Mandel nearly doubled his position in the company to 1.4 million shares valued at $1.5 billion held at the end of 2014. Priceline Group Inc (NASDAQ:PCLN) returned only 2.1% during the first quarter, which is still pretty short from the return of some of its peers. For example, Expedia Inc (NASDAQ:EXPE) jumped by 10.50% during the same period. Stephen Mandel likes Priceline Group Inc (NASDAQ:PCLN) because of its 20% plus annual earnings growth rate. Priceline has been a long-term holding for Lone Pine Capital and the investor reaped some nice profits, taking into account that five years ago, the stock traded at around $200 per share. Billionaires David Tepper and John Griffin are among other billionaires with large positions in Priceline.
Mandel hit a homerun with his nearly $1.2 billion stake in Canada-based Valeant Pharmaceuticals Intl Inc (NYSE:VRX), which contains 8.25 million shares. The investment in Valeant Pharmaceuticals Intl Inc (NYSE:VRX) paid off pretty well during the first three months, as Valeant’s stock surged by 39% amid its acquisition of Salix Pharmaceuticals. Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is also one of the favorite healthcare stocks among hedge funds with Pershing Square, run by Bill Ackman, recently disclosing a 5.7% stake. Other significant shareholders include Jeffrey Ubben and Andreas Halvorsen.
Lone Pine Capital’s performance would have been even better had it not been for its holding in Baidu Inc (ADR) (NASDAQ:BIDU). The stock of the Chinese search engine dropped by 8.6% during the first quarter. Lone Pine had 7.03 million shares valued at $1.6 billion invested in Baidu (NASDAQ:BIDU) which represent 6.7% of the fund’s equity portfolio. One of the main reasons why investors are bullish on Baidu Inc (ADR) (NASDAQ:BIDU) is the exposure to the Chinese search market, where Google is blocked, which allows the company to take advantage of around $15 billion that will be spent on search advertising in 2015 alone. Philippe Laffont, Andreas Halvorsen, Ken Fisher, and Israel Englander are only a few of 16 billionaire investors with long positions in Baidu Inc (ADR) (NASDAQ:BIDU) as of the end of 2014.
Mandel also believes in the long term future of Facebook Inc (NASDAQ:FB). In the last quarter of 2014 he upped his stake in the social media giant by 56% to 13.50 million shares, the stake amassing 4.4% of its equity portfolio. Facebook Inc (NASDAQ:FB) is increasingly popular among the hedge funds we track, with 118 funds disclosing long positions in the latest round of 13F filings. Lone Pine is the largest shareholder of Facebook among the funds we track, followed by Philippe Laffont’s Coatue Management and Ken Griffin’s Citadel Investment Group, which own 7.18 million shares and 5.24 million shares respectively. With a user base of 1.4 billion users, investors also expect some of Facebook Inc (NASDAQ:FB)’s latest acquisitions such as WhatsApp to begin to contribute to underlying profits. Meanwhile, the stock returned 5.4% for the first quarter.
Another double-digit gainer in Mandel’s equity portfolio is represented by Cognizant Technology Solutions Corp (NASDAQ:CTSH). Year-to-date, this IT provider is up by almost 20% and has been the beneficiary of a number of analyst upgrades in recent months. Investors expect Cognizant Technology Solutions Corp (NASDAQ:CTSH) to continue to be well-positioned for the continued trend in IT services. During the last quarter of 2014, Mandel cut his position in Cognizant Technology Solutions Corp (NASDAQ:CTSH) by almost a third to 12.23 million shares and it is unclear if he disagrees with this view or simply picking some profits from a long-term investment. On the other hand, billionaire Israel Englander surged his position in Cognizant by 110% to 1.91 million shares.