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Stephen Mandel and Lone Pine Capital’s New Stock Picks

Stephen Mandel’s Lone Pine Capital has $17 Billion in assets under management. His personal wealth is about one tenth of that. Mandel is a Tiger cub, leaving Julian Robertson in 1997 to launch Lone Pine. He’s a “bottom-up” investor with great stock picking skills. He returned about 23% during the past 11 years, beating the S&P 500 index by more than 20 percentage points per year.

LONE PINE CAPITAL

Stephen Mandel’s Lone Pine Capital had 52 stocks in its 13F portfolio valued at $12.1 Billion at the end of December. He bought 15 new stocks during the fourth quarter, totaling nearly $3 Billion. Here’s how they performed this year:

Company Ticker Return Value (Million)
CITIGROUP INC C 3.8% 687
SCHLUMBERGER LTD SLB 14.1% 585
TECK RESOURCES LTD TCK -10.9% 455
CTRIP COM INTL LTD CTRP -2.4% 174
CABLEVISION SYS CORP CVC 11.2% 173
UNION PAC CORP UNP 4.8% 173
MASTERCARD INC MA 12.0% 171
ETFS PALLADIUM TR PALL 5.9% 112
URBAN OUTFITTERS INC URBN 5.5% 99
SCRIPPS NETWORKS INTERACT IN SNI 3.1% 79
ETFS PLATINUM TR PPLT 3.5% 74
WABCO HLDGS INC WBC 2.9% 55
LIBERTY MEDIA CORP NEW LSTZA 8.2% 55
ISOFTSTONE HLDGS LTD ISS 8.4% 22
INTERNATIONAL FLAVORS&FRAGRA IFF 3.2% 11

His new stock picks returned 4.4% since the end of last year, underperforming the SPY by 2.6 percentage points. Mandel bet nearly $700 Million on Citigroup. Bruce Berkowitz’s Fairholme, Lee Ainslie’s Maverick Capital, George Soros, Bill Miller’s Legg Mason Capital Management, Bill Ackman’s Pershing Square, David Tepper’s Appaloosa, Daniel Loeb’s Third Point, Andreas Halvorsen’s Viking Global, Richard Perry’s Perry Capital, Joseph DiMenna’s Zweig-DiMenna, Leon Cooperman’s Omega Advisors, Brevan Howard, and John Paulson’s Paulson & Co are among the prominent investors who are bullish about Citigroup. Stephen Mandel made more than 14% from his nearly $600 Million Schlumberger bet. T. Boone Pickens also has SLB in his portfolio. Value investor Mohnish Pabrai has large amounts of TCK, Mandel’s third biggest bet, in his portfolio. Lone Pine Capital also bet on Platinum and Palladium, like Dan Loeb did during the fourth quarter.

During the fourth quarter, Lone Pine increased 10 positions by at least 20%. Most of the positions saw at least $50 Million in new purchases. Here is how these 10 stocks performed:

Company Ticker Return Value (Million)
HOME INNS & HOTELS MGMT INC HMIN -16.5% 21
INFORMATICA CORP INFA 10.4% 145
EXPRESS SCRIPTS INC ESRX 5.0% 419
TOWERS WATSON & CO TW 12.3% 181
DOLLAR GEN CORP NEW DG -4.6% 417
VANCEINFO TECHNOLOGIES INC VIT -6.0% 145
NETAPP INC NTAP -3.5% 254
WYNDHAM WORLDWIDE CORP WYN 7.0% 232
EQUINIX INC EQIX 12.0% 328
CHINA LODGING GROUP LTD HTHT -21.3% 23

The weighted average return of these stocks was 3.2% since the end of December, underperforming the SPY by 3.8 percentage points. During the fourth quarter, Lee Ainslie made a $21 Million purchase in the obscure Chinese company China Lodging Group Ltd (HTHT). Two tiger cubs managing more than ten billion dollars purchasing the small cap stock around the same time can’t be a coincidence. Blue Ridge Capital’s John Griffin and Glenview’s Larry Robbins also have large ESRX positions in their portfolios. So far the 2011 performance of these doesn’t look spectacular.

Fortunately for his investors, the rest of his portfolio performed slightly better. Here is how his largest positions performed this year:

Company Ticker Return Value (Million)
CITIGROUP INC C 3.8% 687
YUM BRANDS INC YUM 4.9% 606
SCHLUMBERGER LTD SLB 14.1% 585
APPLE INC AAPL 8.7% 553
COGNIZANT TECHNOLOGY SOLUTIO CTSH 6.1% 477
TECK RESOURCES LTD TCK -10.9% 455
SPDR GOLD TRUST GLD -2.4% 448
EXPRESS SCRIPTS INC ESRX 5.0% 419
DOLLAR GEN CORP NEW DG -4.6% 417
GOODRICH CORP GR 3.7% 397
POLO RALPH LAUREN CORP RL 15.4% 385
JPMORGAN CHASE & CO JPM 13.3% 344
EQUINIX INC EQIX 12.0% 328
CROWN CASTLE INTL CORP CCI -0.1% 327
AMERIPRISE FINL INC AMP 12.8% 311
AMPHENOL CORP NEW APH 8.7% 267
MEAD JOHNSON NUTRITION CO MJN -1.5% 260
NEW ORIENTAL ED & TECH GRP I EDU -7.8% 257
NETAPP INC NTAP -3.5% 254
LAUDER ESTEE COS INC EL 17.1% 245
FAMILY DLR STORES INC FDO 5.7% 235
WYNDHAM WORLDWIDE CORP WYN 7.0% 232
TRANSDIGM GROUP INC TDG 13.2% 208
ACCENTURE PLC IRELAND ACN 10.6% 201
SCHWAB CHARLES CORP NEW SCHW 14.0% 189
TOWERS WATSON & CO TW 12.3% 181
O REILLY AUTOMOTIVE INC ORLY -8.6% 181
DICKS SPORTING GOODS INC DKS 1.4% 179
CTRIP COM INTL LTD CTRP -2.4% 174
CABLEVISION SYS CORP CVC 11.2% 173
UNION PAC CORP UNP 4.8% 173
MASTERCARD INC MA 12.0% 171
DAVITA INC DVA 14.6% 170
LINCARE HLDGS INC LNCR 10.3% 168
AUTODESK INC ADSK 13.6% 165
VANCEINFO TECHNOLOGIES INC VIT -6.0% 145
INFORMATICA CORP INFA 10.4% 145
QUALCOMM INC QCOM 19.6% 125
ETFS PALLADIUM TR PALL 5.9% 112
URBAN OUTFITTERS INC URBN 5.5% 99

Stephen Mandel’s top 40 positions had a weighted average return of 5.7% since the end of December, underperforming the SPY by 1.3 percentage points. The most dominant pattern we’ve observed in Lone Pine Capital’s portfolio is that it shares a lot of stocks with other Tiger cubs. For instance, the only other hedge fund we follow with VanceInfo Technologies Inc (VIT) position is Lee Ainslie’s. In fact, fifteen of the 52 stocks in Mandel’s portfolio are also in Lee Ainslie’s portfolio. These stocks are C, AAPL, JPM, QCOM, URBN, DG, GR, LFT, CTSH, HMIN, DVA, VIT, SVN, HTHT, and ISS.

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