In this article, we discuss 8 new stock picks of billionaire Stephen Mandel.
Lone Pine Capital was founded by billionaire Stephen Mandel in 1997, who served as the hedge fund’s president and portfolio manager till January 2019. Although Mandel does not actively manage Lone Pine Capital’s investments, he is still the managing director of the Connecticut-based hedge fund.
The hedge fund invests primarily in the information technology, healthcare, finance, consumer discretionary, and communications sectors, with a top ten holdings concentration of 48.79%. Lone Pine Capital purchased 6 new stocks in the third quarter, bought additional stakes in 10 securities, sold out of 3 equities, and reduced holdings in 17 companies.
The hedge fund’s top buys for Q3 2021 were Twitter, Inc. (NYSE:TWTR), Bilibili Inc. (NASDAQ:BILI), and Workday, Inc. (NASDAQ:WDAY). Whereas, Lone Pine Capital reduced holdings in Global Payments Inc. (NYSE:GPN), Mastercard Incorporated (NYSE:MA), and Adobe Inc. (NASDAQ:ADBE).
The most notable stocks from Lone Pine Capital’s Q3 portfolio included Microsoft Corporation (NASDAQ:MSFT), Meta Platforms, Inc. (NASDAQ:FB), and Amazon.com, Inc. (NASDAQ:AMZN).
Stephen Mandel of Lone Pine Capital
Our Methodology
We used the investment portfolio of Stephen Mandel’s Lone Pine Capital to select the fund’s newest stock picks from the third quarter of 2021. We ranked the securities according to Lone Pine Capital’s stake value in each holding.
For further context on each stock, we mentioned the Q3 earnings, analyst ratings, and the hedge fund sentiment around the holdings.
Billionaire Stephen Mandel’s Portfolio: New Stock Picks
8. Freshworks Inc. (NASDAQ:FRSH)
Lone Pine Capital’s Stake Value: $11,740,000
Percentage of Lone Pine Capital’s 13F Portfolio: 0.03%
Number of Hedge Fund Holders: 41
Freshworks Inc. (NASDAQ:FRSH) is a tech company offering SaaS solutions, enabling efficient customer services, sales, marketing, and HR operations. Freshworks Inc.’s initial public offering kicked off on September 22, with 28.5 million shares, priced at $36 per share.
Lone Pine Capital acquired an $11.74 million stake in Freshworks Inc. as of Q3 2021, which accounts for 0.03% of the fund’s total investments over the period.
Freshworks Inc. announced its Q3 results on November 2, posting a loss per share of $0.04, beating estimates by $0.06. Revenue over the period totaled $96.61 million, exceeding estimates by $5.69 million.
Barclays analyst Raimo Lenschow on January 11 lowered the price target on Freshworks Inc. to $27 from $45 and kept an Equal Weight rating on the shares, citing valuation as a concern in the software space.
In the third quarter of 2021, 41 hedge funds were bullish on Freshworks Inc., with stakes amounting to $316.23 million.
Like Microsoft Corporation, Meta Platforms, Inc., and Amazon.com, Inc., Freshworks Inc. is a notable stock from Lone Pine Capital’s Q3 portfolio.
7. Marqeta, Inc. (NASDAQ:MQ)
Lone Pine Capital’s Stake Value: $57,988,000
Percentage of Lone Pine Capital’s 13F Portfolio: 0.19%
Number of Hedge Fund Holders: 20
Marqeta, Inc. (NASDAQ:MQ), a company offering prepaid, debit, and credit cards, is one of the newest additions in Lone Pine Capital’s third quarter portfolio, with the hedge fund purchasing 2.62 million shares of the company, worth $57.9 million. The stock accounts for 0.19% of the Q3 securities of Lone Pine Capital.
Marqeta, Inc. announced on November 24 that it is partnering with the payment solutions firm, Paycast, to offer digital card products so that sellers are paid efficiently. Marqeta, Inc. has also offered strategic funding to Paycast.
On November 10, Marqeta, Inc. published its third quarter results, posting a loss per share of $0.08, beating estimates by $0.05. Revenue over the period equaled $131.51 million, exceeding estimates by $12.29 million.
Mizuho analyst Dan Dolev upgraded Marqeta, Inc. to Buy from Neutral with a price target of $20, down from $27 on January 13. The analyst said that after a disappointing start for the company with decelerating volumes from its top customers, he believes that growth for this cohort likely inflected positively in Q3, potentially reflecting wallet-share gains.
Philippe Laffont’s Coatue Management is the biggest Marqeta, Inc. stakeholder as of Q3 2021, with 28.4 million shares worth $612.4 million. Overall, 20 hedge funds were long Marqeta, Inc. in the third quarter, down from 35 funds in the preceding quarter.
Here is what Artisan Mid-Cap Fund has to say about Marqeta, Inc. in its Q3 2021 investor letter:
“Marqeta is a digital payment software company with a focus on providing fintechs and merchants the infrastructure to build and process configurable payment cards. The company’s superior API technology allows it to easily connect to customers’ internal systems, enabling quicker product development and introduction. Marqeta’s growth over the years has been largely attributed to its partnership with Square’s Cash App—more than 70% of revenues—but we believe recent client wins (Google Pay) and the continued emergence of innovative digital payment services who need Marqeta’s technology infrastructure make for a compelling profit cycle ahead. With shares pulling back during the quarter, we initiated a small GardenSM position.”
6. NetEase, Inc. (NASDAQ:NTES)
Lone Pine Capital’s Stake Value: $86,714,000
Percentage of Lone Pine Capital’s 13F Portfolio: 0.29%
Number of Hedge Fund Holders: 32
Lone Pine Capital acquired a stake in NetEase, Inc. (NASDAQ:NTES) during the third quarter, buying more than 1 million shares of the company, worth $86.71 million, representing 0.29% of the fund’s Q3 portfolio. NetEase, Inc. is a Chinese IT company, offering online games, advertising, email services, and e-commerce platforms.
On November 19, NetEase, Inc. declared a $0.225 per average diluted share quarterly dividend, which reflects a 6.2% decrease from the prior dividend of $0.240. The dividend was paid on December 16 to shareholders of record on December 1. NetEase, Inc.’s dividend policy includes paying 20% to 30% of the net income after taxes in each fiscal quarter.
NetEase, Inc. posted its Q3 earnings on November 16, reporting an EPS of $0.90, missing estimates by $0.06. Revenue over the period jumped 22.40% year-over-year to $3.47 billion, outperforming estimates by $145.33 million.
Citi analyst Alicia Yap on November 17 lowered the price target on NetEase, Inc. to $136 from $142 and kept a Buy rating on the shares, citing “solid” Q3 results.
Among the hedge funds tracked by Insider Monkey during the third quarter, 32 funds reported owning stakes in NetEase, Inc., worth $2.3 billion, as compared to 43 funds holding stakes valued at $3.7 billion in NetEase, Inc. in the preceding quarter.
William B. Gray’s Orbis Investment Management is the largest NetEase, Inc. stakeholder, holding 16.3 million shares worth $1.39 billion.
5. Amplitude, Inc. (NASDAQ:AMPL)
Lone Pine Capital’s Stake Value: $88,411,000
Percentage of Lone Pine Capital’s 13F Portfolio: 0.29%
Number of Hedge Fund Holders: 15
Amplitude, Inc. (NASDAQ:AMPL), a company offering analytics products that enable digital optimization for businesses, is one of the newest acquisitions of Lone Pine Capital as of Q3 2021. The hedge fund purchased 1.62 million Amplitude, Inc. shares, worth $88.4 million, representing 0.29% of the total third quarter investments.
Announcing its Q3 results on November 9, Amplitude, Inc. posted a loss per share of $0.05, exceeding estimates by $0.09. Revenue over the period totaled $45.47 million, beating estimates by $1.90 million.
Citi analyst Tyler Radke initiated coverage of Amplitude, Inc. with a Buy rating and a $80 price target on December 8. According to the analyst, Amplitude, Inc.’s platform helps companies unify complex digital product data with other proprietary and customer data sources, which improves strategic decision making.
A total of 15 hedge funds were long Amplitude, Inc. in the third quarter, with stakes amounting to $313.2 million. Gil Simon’s SoMa Equity Partners is one of the leading stakeholders of Amplitude, Inc., with a $54.3 million position in the company.
In addition to Microsoft Corporation, Meta Platforms, Inc., and Amazon.com, Inc., hedge funds are piling into Amplitude, Inc..
4. VTEX (NYSE:VTEX)
Lone Pine Capital’s Stake Value: $108,504,000
Percentage of Lone Pine Capital’s 13F Portfolio: 0.36%
Number of Hedge Fund Holders: 14
VTEX (NYSE:VTEX) is a company offering a digital commerce platform that allows brands to reach customers across multiple channels, accelerate growth, and achieve faster time to market. Lone Pine Capital bought 5.2 million VTEX shares in the third quarter, worth $108.5 million, representing 0.36% of the fund’s Q3 securities.
VTEX announced on September 30 that it has initiated an integration with Meta Platforms, Inc. (NASDAQ:FB) to allow improved ecommerce conversion rates, and enable its clients to register their products on all Meta Platforms, Inc. applications, which will optimize results and sales performance.
Publishing its Q3 results on November 17, VTEX reported a loss per share of $0.07, exceeding estimates by $0.03. The $31.86 million revenue outperformed estimates by $569,250.
Among the hedge funds tracked by Insider Monkey, Chase Coleman’s Tiger Global Management is the largest VTEX stakeholder, with 11.3 million shares worth $232.6 million. Overall, 14 hedge funds were bullish on VTEX in Q3 2021, with stakes valued at $468 million.
Here is what ClearBridge Select Strategy has to say about VTEX in its Q3 2021 investor letter:
“Also within the disruptors segment, we initiated a position in VTEX, an e-commerce and customer engagement software provider serving the higher end of the market in Latin America. VTEX enables large LatAm commerce companies and brands to establish an omnichannel selling presence and helps multinational brands such as Carrefour, L’Oreal, Motorola and Mondelez reach the LatAm market. VTEX expands the portfolio’s exposure to fast growing LatAm, supplementing existing holding MercadoLibre, which operates more as a marketplace in the region.”
3. Victoria’s Secret & Co. (NYSE:VSCO)
Lone Pine Capital’s Stake Value: $475,763,000
Percentage of Lone Pine Capital’s 13F Portfolio: 1.60%
Number of Hedge Fund Holders: 37
Lone Pine Capital purchased 8.60 million Victoria’s Secret & Co. shares as of Q3 2021, worth $475.76 million, representing 1.60% of the fund’s 13F securities. Victoria’s Secret & Co. is an American beauty, fashion, and clothing retailer.
On December 29, Victoria’s Secret & Co. entered an accelerated share repurchase agreement worth $250 million with Goldman Sachs. The company also highlighted its Q4 outlook, announcing an EPS of $2.35 to $2.65, whereas the consensus EPS came in at $2.63. Victoria’s Secret & Co.’s revenue is expected to equal $2.10 billion to $2.163 billion, whereas revenue estimates were $2.14 billion.
BofA analyst Lorraine Hutchinson on December 30 reiterated a Buy rating with an $85 price target on Victoria’s Secret & Co. after the company announced an accelerated share repurchase agreement and reaffirmed its Q4 guidance. The analyst thinks that continued strong execution and accelerated capital returns will boost Victoria’s Secret & Co.’s shares.
Windacre Partnership is one of the leading Victoria’s Secret & Co. shareholders from Q3 2021, with 6.18 million shares worth $341.9 million. Overall, 37 hedge funds were bullish on the stock in the third quarter.
2. Bilibili Inc. (NASDAQ:BILI)
Lone Pine Capital’s Stake Value: $569,908,000
Percentage of Lone Pine Capital’s 13F Portfolio: 1.92%
Number of Hedge Fund Holders: 35
Bilibili Inc., a Chinese video game company, is one of the new stock picks of Lone Pine Capital as of the third quarter of 2021. The hedge fund purchased 8.6 million Bilibili Inc. shares, worth approximately $570 million, representing 1.92% of the total Q3 investments.
On November 19, Bilibili Inc. announced convertible senior notes worth $1400 million, due 2026, bearing an interest rate of 0.5% per year, payable semiannually beginning from June 1, 2022.
In its third quarter earnings report, published on November 17, Bilibili Inc. posted a loss per share of $0.65, beating estimates by $0.01. The Q3 revenue came in at $816.33 million, up 66.04% from the prior-year quarter, outperforming estimates by $11.24 million.
Bernstein analyst Robin Zhu on January 11 downgraded Bilibili Inc. to Market Perform from Outperform with a $45 price target. According to Zhu, Bilibili Inc.’s gross margin targets “hinge on success in inhouse gaming development”, which raises questions about the stock’s near-term valuation and the company’s mid-term profitability.
Jonathan Guo’s Yiheng Capital is one of the largest Bilibili Inc. stakeholders as of Q3, with a $321.3 million position in the company. Overall, 35 hedge funds were long Bilibili Inc. in the third quarter, down from 47 funds in the preceding quarter.
Here is what Tao Value has to say about Bilibili Inc. in its Q3 2021 investor letter:
“As witnessed in the past quarter, the government intervention in the Chinese private sector is elevated to an unprecedented level. Given this background, I thoroughly reviewed all our Chinese holdings and made a few changes. We also exited Bilibili (ticker: BILI), given its priced-in valuation in the context of Chinese ADR confidence loss.”
1. Bath & Body Works, Inc. (NASDAQ:BBWI)
Lone Pine Capital’s Stake Value: $1,531,646,000
Percentage of Lone Pine Capital’s 13F Portfolio: 5.16%
Number of Hedge Fund Holders: 56
Bath & Body Works, Inc. is an Ohio-based retail company selling soaps, lotions, fragrances, and candles. Lone Pine Capital purchased 24.30 million Bath & Body Works, Inc. shares in the third quarter, worth $1.53 billion, representing 5.16% of the fund’s Q3 investments.
On November 5, Bath & Body Works, Inc. declared a quarterly per share dividend of $0.15, which was paid on December 3, to shareholders of record on November 19.
Bath & Body Works, Inc. announced on January 6 its earnings guidance for the fourth quarter. The EPS guidance came in at $2.10 to $2.25, versus a consensus of $2.26.
Deutsche Bank analyst Gabriella Carbone lowered the price target on Bath & Body Works, Inc. to $85 from $87 and kept a Buy rating on the shares on January 7, since the company reported a “solid” holiday but a “bumpy start to the new year”.
Among the hedge funds tracked by Insider Monkey in the third quarter of 2021, 56 funds were bullish on Bath & Body Works, Inc., with stakes amounting to $6.5 billion. This is compared to 53 funds holding stakes worth $6.3 billion in Bath & Body Works, Inc. in the prior quarter.
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This article is originally published at Insider Monkey.
