Stephen Mandel's Lone Pine Capital 13F Filing: Q4 2008 ~ market folly

Thursday, February 19, 2009

Stephen Mandel's Lone Pine Capital 13F Filing: Q4 2008

This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

Next up we have Lone Pine Capital, managed by Stephen Mandel Jr. His $7 Billion fund has returned over 25% annually since its inception in 1997. But obviously, last year was rough on them and many others, as noted in our list of 2008 year end hedge fund performance numbers. Why is Mandel worth following you might ask? Well, he served as a consumer/retail analyst for Tiger Management back in the day for legendary investor Julian Robertson. Robertson's proteges/right-hand men have been nicknamed the "Tiger Cubs" and many have started their own funds. So, not only has Mandel learned from one of the best, but he has put up some very solid returns himself. Mandel is well versed in the ways of finding undervalued companies and his funds typically like to sniff out solid companies with good management that are trading below their intrinsic value. Before checking out this 13F, we recommend looking over their last portfolio update so you can put things in perspective.

The following were their long equity, note, and options holdings as of December 31st, 2008 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.

Some New Positions (Brand new positions that they initiated in the last quarter):
Activison (ATVI)
Abercrombie & Fitch (ANF)
Carnival (CCL) paired certificate
Coach (COH)
Fomento Economico (FMX)
Google (GOOG)
JP Morgan Chase (JPM)
Las Vegas Sands (LVS)
Monsanto (MON)
SPDR Gold Trust (GLD) Calls
Charles Schwab (SCHW)
Union Pacific (UNP)

Some Increased Positions (A few positions they already owned but added shares to)
Sears Holdings (SHLD) Puts: Increased position by 11,172%
Bunge (BG) Puts: Increased position by 9,900%
Mastercard (MA): Increased position by 197%
Visa (V): Increased position by 81%
Precision Cast Parts (PCP): Increased position by 45%
America Movil (AMX): Increased position by 33.3%
Teradata (TDC): Increased position by 15.9%
Qualcomm (QCOM): Increased position by 12.5%
Dolby Labs (DLB): Increased position by 9.8%
Lorillard (LO): Increased position by 6.1%

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
XTO Energy (XTO): Decreased position by 66.7%
Sandridge Energy (SD): Decreased position by 52%

Removed Positions (Positions they sold out of completely)
Crown Castle (CCI)
Dicks Sporting Goods (DKS)
Eagle Materials (EGLE)
Fastenal (FAST)
First Horizon (FHN)
Hansen Natural (HANS)
National City (NCC)
Weatherford (WFT)

Top 20 Holdings (by % of portfolio)

  1. America Movil (AMX): 12.13% of portfolio
  2. Qualcomm (QCOM): 11.84% of portfolio
  3. Visa (V): 7.21% of portfolio
  4. Mastercard (MA): 6.81% of portfolio
  5. JP Morgan Chase (JPM): 6.34% of portfolio
  6. Union Pacific (UNP): 5.37% of portfolio
  7. Monsanto (MON): 4.85% of portfolio
  8. Priceline (PCLN): 4.33% of portfolio
  9. Google (GOOG): 4.23% of portfolio
  10. Precision Cast Parts (PCP): 3.53% of portfolio
  11. Lorillard (LO): 3.34% of portfolio
  12. Carnivall (CCL) paired certificate: 3.14% of portfolio
  13. MSC Industrial (MSM): 2.96% of portfolio
  14. Activision (ATVI): 2.85% of portfolio
  15. Dolby Labs (DLB): 2.6% of portfolio
  16. SPDR Gold Trust (GLD) Calls: 2.48% of portfolio
  17. Teradata (TDC): 2.42% of portfolio
  18. XTO Energy (XTO): 2.29% of portfolio
  19. Coach (COH): 2.09% of portfolio
  20. Sears (SHLD) Puts: 2.01% of portfolio

Its interesting to note that while Lone Pine was selling National City (NCC), John Paulson's firm was adding it last quarter. Additionally, Lone Pine's removal of HANS from their portfolio is intriguing seeing as the shares have run up a lot recently and we had seen a large hedge fund presence in this name. If we were to guess, we'd say they deemed it 'too rich' for the time being, as they had ridden shares from the 20's up to the 30's. They added heavily to their various put positions, but they are still a small position relative to their total portfolio. They started new positions in names like GOOG, COH, ATVI, and UNP and brought them in as large positions in the portfolio. Assets from their long US equity, options, and note holdings were $5.2 billion last quarter and were $6.1 billion this quarter. These assets do not reflect collective firm holdings, but rather the sum of the holdings filed with the SEC. They obviously have short and cash positions as well (which aren't required in the filings). This is just one of many funds in our hedge fund portfolio tracking series where we're tracking 35+ funds and have already covered Paulson & Co (John Paulson), Carl Icahn, and Warren Buffett. We'll be covering a different fund each day so stay tuned.

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