Lone Pine Capital: Portfolio, Team, AUM

Published on July 14, 2023 at 7:48 am by Ramish Cheema in Hedge Funds, News

In this piece, we will take a look at Lone Pine Capital’s portfolio, AUM, and performance. If you want to skip the details about the hedge fund, then head on over to Lone Pine Capital’s Top 5 Stock Picks.

Lone Pine Capital is a hedge fund headquartered in Greenwich, Connecticut. The fund is among those that were set up by the former managers at Julian Robertson’s Tiger Global. It was set up by the billionaire Stephen Mandel in 1997 after he left Tiger Global. According to Forbes Magazine, Mr. Mandel was worth $3.6 billion as of July 2023, making him one of the richest people in the world. He isn’t the only one running the fund though. Lone Pine’s team is run by executives with decades of experience in the finance industry, such as its chief operating officer Ms. Kerry Ann Tyler, its co-chief investment officer Ms. Kelly Granat, chief financial officer and managing director Ms. Mary E McDonnell, and head trader Mr. Brian Francis Doherty.

Out of the myriad of approaches that hedge funds take when investing in the stock market, Lone Pine Capital calls itself a “research-driven, fundamental equity investor.” In simple terms, this means that the firm takes a look at companies’ balance sheets, and their strength, and conducts research into their operations and markets to gauge a sense of their financial situation and future prospects. Mathematically, this includes projecting the future cash flows of a firm and then determining its fair value to check whether it’s traded above or below this value on the stock market. This analysis can involve both factors that are intrinsic to a company – such as its management, product portfolio, or research strength – and the broader macroeconomic environment such as the ease of doing business and consumer spending power.

Through this approach, Lone Pine Capital invests in a variety of companies. Our research suggests that as of the first quarter of 2023, the firm had invested in 29 companies. Some of these investments belong to sectors that are expected to pick up as the coronavirus pandemic is over and the inflationary environment appears to be subsiding. Others are long term plays, particularly those in the technology industry which has been one of the fastest growing sectors in recent years owing to the proliferation of internet usage and consumer electronics such as the smartphone.

For instance, Microsoft Corporation (NASDAQ:MSFT) has been a long term investment of Lone Pine Capital. The hedge fund first bought its shares in 2013’s final quarter, in the form of 25 million shares that were worth $954 million back then. Based on today’s share price, these would be worth a cool $8.4 billion – showcasing a massive gain in just a decade. Lone Pine’s latest stake in Microsoft sees the firm own 2.6 million shares that were worth $772 million as of March 2023. In short, roughly one tenth of the hedge fund’s 2013 stake in terms of shares is nearly worth the same right now. Based on Microsoft’s share price in July, the same 2.6 million shares are worth $876 million.

Moving forward to the hedge fund’s latest investments, as 2023 kicked off, Lone Pine Capital initiated two new positions and grew its investments significantly in a handful of others. The new investments are in KKR & Co. Inc. (NYSE:KKR) and BILL Holdings, Inc. (NYSE:BILL) – both of which are financial firms with different kinds of operations. KKR is purely an investment company which specializes in private equity – a sector that sees decreased activity when economic growth is slower and interest rates are high. However, as the conditions subside, the activity picks up as risk appetites expand and more firms look to grow their operations. BILL, on the other hand, is a software company that offers a cloud platform that enables businesses to automate their financial operations. KKR’s shares are up 25% year to date, and since March, they have appreciated by 11.6%. BILL’s shares are the opposite, as while they have gained 11.2% year to date, between March and July, the stock has appreciated by 49.7%.

In terms of Assets Under Management (AUM), Lone Pine Capital faced quite a reckoning as of June 2022. By then, the hedge fund had an AUM of $5.4 billion – which marked a sharp 51% drop over the year and pushed it to be the 62nd largest hedge fund in the world. These losses were driven by the fund’s bets on the growth and technology sector, with its hedge fund losing 47% between September 2021 and June 2022 and its long only fund tanking by 51.6%. The flagship fund would close the year by posting 36% in losses, and overall, Lone Pine was the fourth worst performing fund in the industry – topped only by C1 Capital, TCI Fund Management, and, of course, Tiger Global.

The 2022 shocks continued to impact Lone Pine’s portfolio. As of March 2023, it was worth $10.8 billion – marking an annual drop of $6 billion or 36%. And not only did the hedge fund add new positions in the first quarter, but it also removed three companies from its portfolio. These are the life sciences company Thermo Fisher Scientific Inc. (NYSE:TMO), the regional bank First Citizens BancShares, Inc. (NASDAQ:FCNCA), and the data analytics firm Equifax Inc. (NYSE:EFX). These are part of a broad portfolio adjustment that had also taken place in Q4 2022 which saw Lone Pine divest even more companies including the star performer of 2023, Meta Platforms, Inc. (NASDAQ:META). Meta has been one of the best performing stocks on the market this year, through its absolutely stunning 148% gains year to date.

With these details in mind, let’s take a look at Lone Pine Capital’s top stock picks, with the notable ones being Microsoft Corporation (NASDAQ:MSFT), Workday, Inc. (NASDAQ:WDAY), and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM).

Stephen Mandel of Lone Pine Capital

Our Methodology

To compile our list of Lone Pine Capital’s stocks, we used the fund’s SEC filings for the first quarter of this year. Added context, such as the number of hedge funds out of the 943 part of Insider Monkey’s Q1 2023 database and share price gains or losses since March is also provided.

Lone Pine Capital: Portfolio, Team, AUM and Performance

10. UnitedHealth Group Incorporated (NYSE:UNH)

Lone Pine Capital’s Q1 2023 Investment: $421 million

Share Price Gain Since March: -4%

UnitedHealth Group Incorporated (NYSE:UNH) is an American healthcare plan provider whose shares have lost 4% since March. Despite this, its shares are rated Strong Buy on average and the average share price has a whopping $129 upside.

Lone Pine Capital owned 891,167 UnitedHealth Group Incorporated (NYSE:UNH) shares during this year’s March quarter for a $421 million stake. During the same time period, 116 of the 943 hedge funds part of Insider Monkey’s database had also invested in the firm. UnitedHealth Group Incorporated (NYSE:UNH)’s largest hedge fund investor is Rajiv Jain’s GQG Partners through a $2.2 billion stake.

Along with Workday, Inc. (NASDAQ:WDAY), Microsoft Corporation (NASDAQ:MSFT), and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), UnitedHealth Group Incorporated (NYSE:UNH) is a stock Lone Pine Capital invested in earlier this year.

9. RH (NYSE:RH)

Lone Pine Capital’s Q1 2023 Investment: $431 million

Share Price Gain Since March: 56%

RH (NYSE:RH) is a consumer cyclical retailer that sells furnishings, textiles, and other home products. Its shares have gained a whopping 56% on the stock market since March and it has a $105 share price upside.

Insider Monkey took a look at 943 hedge funds for their first quarter of 2023 shareholdings to discover that 59 had bought RH (NYSE:RH)’s shares. Out of these, Lone Pine Capital had a $431 million stake, which also made it the firm’s largest hedge fund investor in our database.

8. TransDigm Group Incorporated (NYSE:TDG)

Lone Pine Capital’s Q1 2023 Investment: $515 million

Share Price Gain Since March: 20.5%

TransDigm Group Incorporated (NYSE:TDG) is an aerospace company that makes and sells a variety of products such as landing gears, actuators, and ignition technologies. Its shares are rated Strong Buy on average and the firm has beaten analyst EPS estimates in all four of its previous quarters.

Stephen Mandel’s Lone Pine Capital owned 696,848 TransDigm Group Incorporated (NYSE:TDG) shares during Q1 2023, for a $515 million investment. Along with him, 67 of the 943 hedge funds part of Insider Monkey’s database had also bought the firm’s shares, out of which the largest investor is Mark Massey’s AltaRock Partners with a $1 billion stake.

7. Booking Holdings Inc. (NASDAQ:BKNG)

Lone Pine Capital’s Q1 2023 Investment: $542 million

Share Price Gain Since March: 5.1%

Booking Holdings Inc. (NASDAQ:BKNG) is a travel services provider that enables people to manage their vacations and other travels. The firm is currently trying to expand its portfolio in Europe by acquiring a flight booking platform.

After looking through 943 hedge funds for 2023’s first quarter, Insider Monkey discovered that 77 had invested in Booking Holdings Inc. (NASDAQ:BKNG). Out of these, Lone Pine Capital had held a $542 million stake while the firm’s largest shareholder is Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital with its $923 million investment.

6. DICK’S Sporting Goods, Inc. (NYSE:DKS)

Lone Pine Capital’s Q1 2023 Investment: $647 million

Share Price Gain Since March: -1.9%

DICK’S Sporting Goods, Inc. (NYSE:DKS) is a retailer that sells different sports products such as hunting and golf equipment. Despite an inflationary environment, the firm has beaten analyst EPS estimates in all of its previous four quarters. Its shares have a $17 upside.

Mr. Mandel’s hedge fund had owned 4.5 million DICK’S Sporting Goods, Inc. (NYSE:DKS) shares during this year’s first quarter, allowing it to hold a $647 million stake, making him the firm’s largest investor. During the same time period, 43 of the 943 hedge funds part of Insider Monkey’s database had also invested in the company.

Microsoft Corporation (NASDAQ:MSFT), DICK’S Sporting Goods, Inc. (NYSE:DKS), Workday, Inc. (NASDAQ:WDAY), and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) are some of Stephen Mandel’s Lone Pine Capital’s top stock picks.

Click to continue reading and see Lone Pine Capital’s Top 5 Stock Picks.

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