Billionaire Stephen Mandel’s Portfolio: 3 New Stock Picks

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. (NASDAQ:BILI), 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. (NASDAQ:BILI) shares, worth approximately $570 million, representing 1.92% of the total Q3 investments. 

On November 19, Bilibili Inc. (NASDAQ:BILI) 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. (NASDAQ:BILI) 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. (NASDAQ:BILI) to Market Perform from Outperform with a $45 price target. According to Zhu, Bilibili Inc. (NASDAQ:BILI)’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. (NASDAQ:BILI) stakeholders as of Q3, with a $321.3 million position in the company. Overall, 35 hedge funds were long Bilibili Inc. (NASDAQ:BILI) in the third quarter, down from 47 funds in the preceding quarter. 

Here is what Tao Value has to say about Bilibili Inc. (NASDAQ:BILI) 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.”