With the close of each quarter comes an exciting season for investors – the release of hedge funds’ 13F filings, which outline their holdings and can give considerable insight into the thought process of billionaires, analysts, and traders. We at Insider Monkey take specific interest in these releases, as we have found that the most popular small cap stocks among hedge funds have outperformed the market by 18 percentage points per year, even despite the lag between actual investment and the date at which they are filed (read more about this phenomenon here). Billionaire Stephen Mandel of Lone Pine Capital recently released his fund’s Q4 2012 13F, and we have analyzed the top holdings below.
Lone Pine’s top ten positions account for about 44% of its total portfolio value, with Google Inc (NASDAQ:GOOG) receiving almost 7% of the fund’s $15.9bn. Google saw a loss in popularity amongst hedge funds going into the end of 2012, with the number of funds holding the stock reducing from 143 in Q3 2012 to 126 in Q4 2012, a decline of 12%. Google continues to have woes in Europe, as the EU is inching along its antitrust probe and voicing its concerns over Google’s treatment and protection of user data, which has seen opposition from France and Spain lately. Google Inc (NASDAQ:GOOG) is Farallon Capital’s fifth-largest position (view the fund’s other top holdings here).
Priceline.com Inc (NASDAQ:PCLN) has the same percentage allocation as GOOG, capturing over a billion dollars of the fund’s AUM. The online travel company has experienced high growth rates in revenue and bookings that have outpaced fellow competitor Expedia, and it is hoping that its recent $1.8bn purchase of Kayak will continue to increase market share. Expected earnings growth for 2013 comes in at over 20%, giving the stock a forward price-to-earnings ratio of 18. Tiger Global Management reduced its Priceline.com Inc (NASDAQ:PCLN) position by 36% last quarter (see the fund’s holdings here).
Cognizant Technology Solutions Corp (NASDAQ:CTSH) remains the fund’s third-largest holding, unchanged from the quarter prior except for a slight 3% increase in shares. The company provides custom IT and technology services and possesses the highest growth profile amongst its competitors. CTSH beat or met expectations for every earnings announcement last year, albeit by less than a nickel each time. Cognizant announced its intent to buy six companies from German-based C1 Group around Christmas time last year, increasing its budding footprint in Europe. Famed investor George Soros recently added a $39mm position last quarter (see his fund’s top picks here).
Continue reading to see the best of the rest.
$15.5bn clothing empire Ralph Lauren Corp (NYSE:RL) has become a near-$600mm position for Lone Pine; the fund grew its holdings significantly in the first half of 2012, only to taper it by almost 10% towards the end of the year. RL recently drew an upgrade from Morgan Stanley at the start of this year after a number of positive earnings surprises in 2012. Its most recent announcement on the sixth of February showed improved margins and a rise in comparable store sales; the company guided a 2% year-over-year increase in revenue for fiscal 2013 as well. John Griffin of Blue Ridge Capital kept his 1.64mm shares unchanged from Q3 2012 to Q4 2012 (view his portfolio here).
Discount retailer Dollar General Corp. (NYSE:DG) recently announced large expansion plans for 2013, hoping to open 635 stores in the coming fiscal year while striving to improve inventory and cost controls. DG will continue to fight for shoppers against fellow low-cost retailers like Dollar Tree and Family Dollar; the company could also face difficulty retaining customers as Wal-Mart’s pricing and advertising becomes more aggressive. Wall Street remains positive on the stock however, with a bullish price target a year out coming in at 17% above current levels. David Harding of Winton Capital Management has a $5mm investment in DG (see his portfolio here).
Disclosure: I do not own shares of any stocks mentioned in this article.