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This Is How Billionaire Stephen Mandel’s Fund Gears Its Portfolio for Internet Age

Many hedge funds fell victim to the volatile market forces in the fourth quarter, but billionaire Stephen Mandel‘s Lone Pine Capital’s equity portfolio managed to return 5.4% during the quarter based on our methodology which took into account the firm’s top 43 long positions in companies with a market capitalization exceeding $1.0 billion. By the same calculations, the fund, which has about $36.56 billion assets under management, returned 4.3% for the full year. According to an investor letter, the fund is heavily betting on internet-based companies and companies operating in this space with questionable business models constitute Lone Pine’s short portfolio, while the fundamentally sound ones have a place in the firm’s long book. Let us take a closer look at some of the firm’s top equity picks heading into 2016.

Stephen Mandel
Stephen Mandel
Lone Pine Capital

Insider Monkey’s database contains more than 700 hedge funds and other institutional investors that registered a strong performance over the years and whose equity portfolios we analyze every quarter to determine which stocks they are bullish on. This approach allows us to benefit from the expertise and stock-picking skills of these investors and helps us determine stocks that can substantially outperform the market (see more details here).

#5 Dollar Tree, Inc. (NASDAQ:DLTR)

– Shares Owned by Lone Pine Capital (as of December 31): 13.19 million

– Value of Holding (as of December 31): $1.02 Billion

Lone Pine hiked its top bet in the consumer discretionary sector by about 156% during the October-December period. The holding now represents about 4.35% of the fund’s portfolio as of the end of December. Dollar Tree, Inc. (NASDAQ:DLTR)’s stock has inched up by 2.25% during the last 12 months and was recently upgraded by Morgan Stanley and Telsey Advisory Group to ‘Equal-Weight’ from ‘Underweight’ and to ‘Outperform’ from ‘Market Perform’, respectively. The company has produced positive comparable-store sales for 31 straight quarters. According to CEO Bob Sasser the retailer is not only attracting new customers, but the customers are also spending more. Charles Akre‘s Akre Capital Management held more than 4.18 million shares of Dollar Tree, Inc. (NASDAQ:DLTR) at the end of December.

 

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#4 Facebook Inc (NASDAQ:FB)

– Shares Owned by Lone Pine Capital (as of December 31): 9.79 million

– Value of Holding (as of December 31): $1.02 Billion

During the fourth quarter Lone Pinned reduced its stake in the $300 billion social networking company by 8%. After strong fourth-quarter financial results, which showed ad revenue rising by 57%, Facebook Inc (NASDAQ:FB) is now teaming up with Intel, Nokia and telecom carriers in an initiative called Telecom Infra Project, or TIP. The idea behind the initiative is to help carriers connect people that don’t have cellular service, by sharing information about designing cellular networkds. The plan is similar to Facebook’s previously successful Open Compute Project. The company’s stock price has been on fire lately surging by over 30% in the last year. Phillippe Laffont’s Coatue Management held more than 9.79 million shares of Facebook Inc (NASDAQ:FB), according to its latest 13F filing.

#3 Priceline Group Inc (NASDAQ:PCLN)

– Shares Owned by Lone Pine Capital (as of December 31): 834,421

– Value of Holding (as of December 31): $1.06 Billion

After a 15% reduction during the October-December period, Lone Pine’s stake in Priceline Group Inc (NASDAQ:PCLN) amassed 4.55% of its equity portfolio. After delivering its financial results for the fourth quarter the stock has advanced by 20% during the last week and is trading 1% in the green year-to-date. The company’s EPS came in at $12.63 above the estimates of $11.8, while the revenue of $2 billion was also higher than the anticipated $1.96 billion. The strong performance came despite foreign currency headwinds. Gross travel bookings which jumped by 13% on yearly basis represented a 24% increase in constant currency terms. Another Tiger Cub, Chase Coleman’s Tiger Global Management, initiated a stake containing 758,389 shares of Priceline during the last three months of 2015.

 

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