In this article, we will take a look at billionaire Stephen Mandel’s top 10 stock picks.
Billionaire investor, hedge fund manager and former Tiger Cub Stephen Mandel is the founder and managing director of the Connecticut-based investment management firm, Lone Pine Capital. After earning his B.A from Dartmouth College and his M.B.A from Harvard University, Stephen Mandel began his career as a senior consultant at Mars and Company. He later served as a mass-market retail analyst at The Goldman Sachs Group, until eventually joining Tiger Management in 1990, where he served as senior managing director and consumer analyst under the tutelage of the legendary Julian Robertson. In 1997, he left Tiger Management and founded his own hedge fund, Lone Pine Capital.
Lone Pine Capital, as an investment management fund, oversees more than $31.6 billion in its portfolio. According to the most recent 13F filings, Lone Pine Capital’s portfolio branches out into 8 principal sectors, with the Technology sector dominating, making up 44.9% of the fund’s total portfolio value.
Some of the top stocks present in the investment portfolio of Lone Pine Capital at the end of the second quarter of 2021 include Facebook, Inc. (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT) and Square, Inc. (NYSE:SQ), among others discussed in detail below.
Stephen Mandel of Lone Pine Capital
Our Methodology
Let us now look towards billionaire Stephen Mandel’s top 10 stock picks. We used Lone Pine Capital’s 13F portfolio for the second quarter for this analysis.
Why should we pay attention to Stephen Mandel’s stock picks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Billionaire Stephen Mandel’s Top 10 Stock Picks
10. DoorDash, Inc. (NYSE:DASH)
Lone Pine Capital’s Stake Value: $1.33 billion
Percentage of Lone Pine Capital’s 13F Portfolio: 4.2%
Number of Hedge Fund Holders: 45
DoorDash, Inc. (NYSE:DASH) is an online food ordering and food delivery company based in San Francisco, U.S, and is considered the largest food delivery company in the United States.
Stephen Mandel’s Lone Pine Capital currently owns 7.46 million shares in DoorDash, Inc., amounting to $1.33 billion in worth and accounting for 4.2% of the fund’s portfolio. In Q2 2021, 45 hedge funds held stakes in DoorDash, Inc., compared with 38 in the previous quarter.
On October 18, JMP Securities analyst Andrew Boone raised his price target on DoorDash, Inc. to $230 from $210, and kept an Outperform rating on the shares of the company.
9. ServiceNow, Inc. (NYSE:NOW)
Lone Pine Capital’s Stake Value: $1.35 billion
Percentage of Lone Pine Capital’s 13F Portfolio: 4.28%
Number of Hedge Fund Holders: 91
ServiceNow, Inc. (NYSE:NOW) is a software company that develops a cloud computing platform for companies to manage their digital workflow and operations.
On October 22, Oppenheimer analyst Ray McDonough raised the price target on ServiceNow, Inc. to $775 from $700, and kept an Outperform rating on the company’s shares.
As of Q2 2021, Stephen Mandel owns 2.46 million shares of ServiceNow, Inc., amounting to more than $1.35 billion in worth and account for 4.28% of the fund’s investment portfolio. Of the 873 hedge funds being tracked by Insider Monkey, 91 held stakes in the company at the end of the June quarter.
Just like Facebook, Inc., Amazon.com, Inc., Microsoft Corporation and Square, Inc., ServiceNow, Inc. is one of Lone Pine Capital’s top stocks.
In its Q1 2021 investor letter, Palm Capital, an asset management firm, highlighted a few stocks and ServiceNow, Inc. was one of them. Here is what the fund said:
“ServiceNow provides software solutions to structure and automate various task and processes for large businesses. The company began in 2004 with a solution to help businesses manage the IT services they offer employees and customers. Unlike the existing solutions in the market, ServiceNow’s offering was built using modern architecture that was flexible, modular, and user-friendly. And it left the incumbents – large companies such as BMC, IBM and MicroFocus – playing catch up.
As the company grew to dominate this market, it saw the opportunity to expand its offering to include the broader task of IT Operations Management – or the monitoring and control of an entire business’s IT infrastructure. And over time its success in improving productivity and user experience in IT resulted in customers asking the company to expand its offering into other business workflows including HR Management and Customer Services – which it has since done.
All ServiceNow’s applications (including those built by customers and third parties) are built on its ‘Now’ platform. This allows the company and its customers to innovate and deploy new solutions quickly. And it helps ServiceNow gather a large amount of data to gain insights into and use machine learning to build solutions to meet customer needs in other areas. Crucially, this platform can interface with other SaaS and legacy software services used by its customers. Not only does this allow an IT department to manage all the myriad software services used by a business from a single point of control, it also reduces the operational disruption risk for those transitioning from legacy software systems to the cloud.
Aside from the ease of use of ServiceNow’s offerings, the other factor driving its growth is that its ‘land and expand’ strategy starts in the IT department of customers – the very department whose task it is to recommend other software solutions for businesses. It is therefore no surprise that more than 75% of ServiceNow’s customers use more than one of its products and 80% of its new business is from existing clients.
The company now serves…”[read the entire letter here]
8. Square, Inc. (NYSE:SQ)
Lone Pine Capital’s Stake Value: $1.39 billion
Percentage of Lone Pine Capital’s 13F Portfolio: 4.4%
Number of Hedge Fund Holders: 94
Square, Inc. provides payment processing solutions to different enterprises.
On September 15, Evercore ISI analyst David Togut maintained an Outperform rating on Square, Inc. and increased his price target for the stock to $371 from $361.
According to the Q2 13F Filings, Lone Pine Capital holds over 5.7 million shares in the company. These shares are valued at $1.39 billion and represent 4.4% of the fund’s portfolio. At the end of the second quarter of 2021, 94 hedge funds in the database of Insider Monkey held stakes worth $10.3 billion in Square, Inc., up from 92 in the preceding quarter worth $9.20 billion.
7. Adobe Inc. (NASDAQ:ADBE)
Lone Pine Capital’s Stake Value: $1.4 billion
Percentage of Lone Pine Capital’s 13F Portfolio: 4.47%
Number of Hedge Fund Holders: 89
On September 22, JPMorgan analyst Sterling Auty raised the firm’s price target on Adobe Inc. (NASDAQ:ADBE) to $680 from $660, and kept an Overweight rating on the shares of the company.
At the end of the second quarter of 2021, 89 hedge funds in the database of Insider Monkey held stakes worth $13.1 billion in Adobe Inc. down from 107 in the preceding quarter worth $12.1 billion. Stephen Mandel’s hedge fund holds over 2.4 million shares. These shares amount to $1.4 billion, representing 4.47% of his fund’s portfolio value.
In its second-quarter 2021 investor letter, Richie Capital Group mentioned Adobe Inc.. Here is what the fund said:
“Adobe Systems (ADBE – up 24.8%) – In the last 15 years, Adobe has transformed itself into a software behemoth, more than tripling its revenue since 2010. The company is famous for its namesake PDF-reader and photo-editing software Photoshop. However, ADBE sells a full suite of software products through a recurring subscription model. The company transitioned from selling boxed software to recurring subscriptions in 2013 and revenues have grown consistently since. The company achieved $13B in revenue in 2020 with 88% Gross Margins.”
6. Microsoft Corporation (NASDAQ:MSFT)
Lone Pine Capital’s Stake Value: $1.42 billion
Percentage of Lone Pine Capital’s 13F Portfolio: 4.51%
Number of Hedge Fund Holders: 238
As of Q2 2021, Stephen Mandel of Lone Pine Capital held over 5.27 million shares of the tech giant. These shares were valued at $1.42 billion and represented 4.51% of his hedge fund’s portfolio value. By the end of the second quarter of 2021, 238 hedge funds out of the 873 tracked by Insider Monkey held stakes in Microsoft Corporation, worth roughly $62.46 billion, compared to 251 hedge funds in the previous quarter, with stakes worth approximately $58.9 billion.
In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ:MSFT) was one of them. Here is what the fund said:
“We have written extensively about Microsoft in recent commentaries. It was our leading contributor last year and one of our largest weightings within the Portfolio. It continues to experience business momentum through several dominant, essential, and competitively advantaged businesses, like Office 365 and Azure. The markets it competes for are enormous, which gives the company the ability to compound at scale. In the past quarter alone, the company generated over $40 billion in revenue, representing a 17% growth rate. The inherent operating leverage in Microsoft’s business model continues and led to 34% earnings growth this past quarter. Despite the broad rotation we saw in the first quarter and Microsoft’s robust performance in 2020, we think its business fundamentals continue to exhibit strength, and the stock continues to reflect the fundamentals.”
5. Snap Inc. (NYSE:SNAP)
Lone Pine Capital’ Stake Value: $1.56 billion
Percentage of Lone Pine Capital’s 13F Portfolio: 4.93%
Number of Hedge Fund Holders: 64
Snap Inc. (NYSE:SNAP) comes in at fifth on the list of billionaire Stephen Mandel’s top 10 stock picks. The firm operates as social media and camera-based communication company. Some of the company’s most notable products include Snapchat and Bitmoji.
During the second financial quarter, 64 hedge funds out of the 873 funds tracked by Insider Monkey held stakes in Snap Inc. worth $5.4 billion. Stephen Mandel’s Lone Pine Capital holds over 22.94 million shares of the company, worth more than $1.56 billion, representing 4.93% of the fund’s total portfolio value.
On October 18, KeyBanc analyst Justin Patterson raised his price target on Snap Inc. to $90 from $88, and maintained an Overweight rating on the shares of the company.
Here is what RiverPark Funds has to say about Snap Inc. in its Q2 2021 investor letter:
“Snap shares were a top contributor for the quarter as well, also driven by strong first quarter results. The company reported accelerating revenue growth of 66% for the period (up from 62% fourth quarter growth), driven by user growth of 22%, and a 36% expansion in average revenue per user (ARPU). The company also guided to stronger-than-expected and accelerating 81%-85% revenue growth for second quarter 2021. Adjusted EBITDA improved by $79 million year over year for a break-even margin, up 1,800 basis points, and free cash flow improved dramatically, turning positive for the period to $126 million. Snap also continued to roll-out products that should help drive further expansion in user growth and ARPU, including Spotlight, a TikTok-like experience, with more than 125 million Snapchatters using it during March, and original programming starring Ryan Reynolds.
With TTM of $2.8 billion in revenue and an ARPU that is about 1/2 that of Twitter and 1/3 that of Facebook, we believe Snap has a long runway for both revenue growth and expanded profitability as it improves its platform functionality, grows its audience, and continues to advance its monetization.”
4. Amazon.com, Inc. (NASDAQ:AMZN)
Lone Pine Capital’ Stake Value: $1.66 billion
Percentage of Lone Pine Capital’s 13F Portfolio: 5.26%
Number of Hedge Fund Holders: 271
Amazon.com, Inc. is a multinational company that specializes in e-commerce, cloud computing, digital streaming and artificial intelligence. The company is ranked fourth on the list of billionaire Stephen Mandel’s top 10 stock picks.
There were 271 hedge funds in the database of Insider Monkey that held stakes in Amazon.com, Inc. worth $60.49 billion in the second quarter of 2021, compared to 243 funds in the first quarter with total stakes amounting to approximately $50.4 billion. Stephen Mandel of Lone Pine Capital held 484,741 shares in the company by the end of the quarter. These shares are valued at $1.66 billion and account for 5.26% of his fund’s total investment portfolio.
On October 21, Baird analyst Colin Sebastian maintained an Outperform rating, alongside a $4,000 price target on Amazon.com, Inc. shares.
Madison Funds, in its Q3 2021 investor letter, mentioned Amazon.com, Inc. (NASDAQ:AMZN). Here is what the fund had to say:
“We did add a modest new position weight to the portfolio in the quarter in Amazon.com, Inc. stock (AMZN). We acknowledge that many aspects of Amazon’s merit as an investment are well appreciated. However, our work leads us to conclude that shares are attractive. Leadership positions in both e-commerce and cloud computing provide the company with significant durable competitive advantages in industries that we think can produce above average growth over the next decade. Over the past year, AMZN shares have trailed the market as investors debate near-term growth prospects following the pandemic-induced e-commerce demand. Additionally, margins have been depressed due to Amazon’s unprecedented increases in spending to build out fulfillment and in-house logistics capabilities – Amazon will build out more square footage this year and last than it did cumulatively over the previous 10 years, more than doubling its in-house delivery capacity. We like the investments Amazon is making and believe they will further advantage the company relative to other retailers, making it nearly impossible for competitors to match the same level of delivery speed and convenience. With its large and frequently engaged customer base, Amazon has multiple mechanisms to make money, including selling advertising and enhanced subscription services. Within the cloud business, we forecast Amazon Web Services (AWS) leveraging its strengths in Infrastructure-as-a-service (IaaS) to move into higher value segments of cloud computing (such as platform-as-a-service: PaaS), allowing the company to continue outgrowing the overall IT sector with strong profitability. While Amazon shares have performed extremely well over the long-term, we think near-term concerns about whether Amazon will earn a return on its accelerated investments provide an opportunity now for investors willing to look through the investment period. Our view is that the investments likely earn strong returns and extend Amazon’s competitive advantages and aboveaverage growth.”
3. Facebook, Inc. (NASDAQ:FB)
Lone Pine Capital’ Stake Value: $1.73 billion
Percentage of Lone Pine Capital’s 13F Portfolio: 5.47%
Number of Hedge Fund Holders: 266
As of the end of the second quarter, 266 hedge funds tracked by Insider Monkey reported owning stakes in Facebook, Inc.. The total worth of these stakes is $42.34 billion. This shows the hedge fund sentiment is positive for the social media company as 257 funds had stakes in the company in the previous quarter, with a total worth of $40.96 billion.
As of Q2 2021, Stephen Mandel’s Lone Pine Capital holds over 4.98 million shares of Facebook, Inc., amounting to more than $1.73 billion in worth and representing 5.47% of the fund’s total portfolio value.
On September 30, RBC Capital analyst Brad Erickson initiated coverage of Facebook, Inc. with an Outperform rating alongside a $425 price target on the company’s shares.
First Eagle Investment Management, an investment management firm, In its Q2 2021 investor letter stated that Facebook, Inc. was among the leading contributors in the fund’s portfolio for the quarter. Here is what the fund said:
“Leading contributors in the First Eagle Global Fund this quarter included Facebook, Inc. Class A. Facebook has continued to post impressive results for both revenue and active users of its traditional platforms. In the meantime, the social media giant continues to make progress on new initiatives—like Facebook Horizon (virtual reality) and Facebook Shops (e-commerce)—and maintains attractive monetization optionality around services like Messenger and WhatsApp.”
2. Bath & Body Works, Inc. (NYSE:BBWI)
Lone Pine Capital’ Stake Value: $1.89 billion
Percentage of Lone Pine Capital’s 13F Portfolio: 5.97%
Number of Hedge Fund Holders: N/A
Bath & Body Works, Inc. is an international retail company involved in the sales of personal care and beauty products throughout the United States.
On September 27, Atlantic Equities analyst Daniela Nedialkova upgraded Bath & Body Works, Inc. to Overweight from Neutral with an $82 price target.
According to the latest filings, Lone Pine Capital owned over 26.26 million shares in the firm at the end of June 2021 worth more than $1.89 billion, representing 5.97% of the portfolio.
1. Shopify Inc. (NYSE:SHOP)
Lone Pine Capital’ Stake Value: $2.38 billion
Percentage of Lone Pine Capital’s 13F Portfolio: 7.53%
Number of Hedge Fund Holders:
Shopify Inc. (NYSE:SHOP) is a multinational e-commerce company based in Ontario. The company provides an e-commerce platform for online stores and retail point-of-sale systems.
By the end of the second quarter of 2021, 85 hedge funds out of the 873 tracked by Insider Monkey held stakes in Shopify Inc. worth roughly $13.97 billion. This is compared to 91 hedge funds in the previous quarter with a total stake value of approximately $9.98 billion.
Stephen Mandel of Lone Pine Capital currently holds over 1.63 million shares in Shopify Inc.. These shares amount to more than $2.38 billion and represent 7.53% of the fund’s investment portfolio.
On October 14, TD Securities analyst Daniel Chan initiated coverage of Shopify, Inc. with a Hold rating and $1,500 price target.
In the Q2 2021 investor letter of ClearBridge Investments, the fund mentioned Shopify Inc.. Here is what the fund said:
“Shopify (is one of the) companies that have become go-to platforms for small and medium size businesses (SMBs) engaged in e-commerce and social media marketing, rebounded strongly in the quarter after being caught in the selloff among high-multiple growth names since Vaccine Monday. These and the portfolio’s other disruptors had thrived through the first part of the pandemic, leading us to trim positions into strength and reallocate cash into more attractively priced evolving opportunities and steady compounders that had been overly punished by lockdowns and a drop in economic activity.”
You can also view Top 10 Stocks to Invest in According to John Smith Clark’s Southpoint Capital Advisors and Carl Icahn’s Stock Portfolio: Top 12 Picks.
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This article is originally published at Insider Monkey.
