Hedge Fund Tracking: Stephen Mandel's Lone Pine Capital - 13F Filing 3rd Quarter 2008 ~ market folly

Wednesday, November 19, 2008

Hedge Fund Tracking: Stephen Mandel's Lone Pine Capital - 13F Filing 3rd Quarter 2008

(Note: Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here).

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. We're aiming to cover 35 or so prominent funds this time around and we'll be releasing the 13f analysis of each individual fund here in the coming weeks. We've already covered Whitney Tilson's T2 Partners, Peter Thiel's Clarium Capital, and Bill Ackman's Pershing Square. Next up, we have Lone Pine Capital, managed by Stephen Mandel Jr. Lone Pine is an $8 Billion fund that has returned over 25% annually ever since its inception in 1997. 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.

A year ago, 1 of his funds was up 34% before fees while another was up 32% before fees. His track record speaks for itself. And, not to mention, he learned from one of the greats in Julian Robertson. However, 2008 has not been kind to Lone Pine, as they find themselves -26.5% for the year as of the end of September. You can also see how numerous other hedge funds have fared with our October hedge fund performance update. Before checking out their holdings from last quarter, you might be interested in checking out our analysis of Lone Pine's previous 13F (2nd quarter). Additionally, we noted that Lone Pine had recently taken a 6.8% stake in Dolby (DLB).

So, now that we've got a background on Mandel and Lone Pine, let's take a quick look at his portfolio highlights. Keep in mind that this is merely a brief summary of Lone Pine's top holdings. Due to the time sensitive nature of the 13F material, we wanted to get this information posted as soon as possible. Also, we'd like to give a special thank you to Alex Prywes who has helped us with the 13f analysis so that we can cover more funds.

The following were Lone Pine's long equity and options holdings as of September 30th, 2008 as filed with the SEC.

New Positions (Brand new positions that Lone Pine initiated in the last quarter):
Crown Castle (CCI)
Dolby Labs (DLB)
First Horizon National Corp (FHN)
Precision Cast Parts (PCP)
Sears Holdings (SHLD) Puts
National City Corp (NCC)
Hansen Natural (HANS)

Added to (Positions LP already owned but added more shares)
Visa (V): Increased position by 180%.
Priceline (PCLN): Increased position by 154%.
Weatherford (WFT): Increased position by 61%.
Qualcomm (QCOM): Increased position by 57%.
Mastercard (MA): Increased position by 51%.
XTO Energy (XTO): Increased position by 40%.
America Movil (AMX): Increased position by 26%.
Sandridge Energy (SD): Increased position by 12%.
Lorillard (LO): Increased position by 3%.

Reduced Positions (Positions LP sold some shares of)
Sears Holdings (SHLD) Puts: Reduced by 99.85%.
Bunge (BG) Puts: Reduced by 99%.
Sears Holdings (SHLD) 2nd set of Puts: Reduced by 93%
Dicks Sporting Goods (DKS): Reduced by 49.5%.
Eagle Materials (EGLE): Reduced by 38%.
SAIC (SAI): Reduced by 25.7%.
Fastenal (FAST): Reduced by 24.95%.
Teradata (TDC): Reduced by 6.73%.
MSC Industrial (MSM): Reduced by 4.84%.

Positions with no change
Deltek (PROJ): 4.34% of portfolio

Removed Positions (Positions LP sold out of completely)
Amazon (AMZN)
Entergy (ETR)
Monsanto (MON)
CB Richard Ellis (CBG)
New York Times (NYT) Puts
Brookfield Asset Mgmt (BAM)
Infosys (INFY)
Google (GOOG)
Illumina (ILMN)

Top 20 Holdings (by % of portfolio)

  1. America Movil (AMX): 15.9% of the portfolio
  2. Qualcomm (QCOM): 14.8% of the portfolio
  3. XTO Energy (XTO): 10.6% of the portfolio
  4. Visa (V): 5.46% of the portfolio
  5. Sandridge Energy (SD): 5.17% of the portfolio
  6. Priceline (PCLN): 4.72% of the portfolio
  7. Lorillard (LO): 4.67% of the portfolio
  8. Fastenal (FAST): 4.34% of the portfolio
  9. MSC Industrial (MSM): 4.34% of the portfolio
  10. Crown Castle (CCI): 4.10% of the portfolio
  11. Precision Cast Parts (PCP): 3.78% of the portfolio
  12. Weatherford (WFT): 3.73% of the portfolio
  13. Mastercard (MA): 3.34% of the portfolio
  14. Teradata (TDC): 3.22% of the portfolio
  15. Dolby Labs (DLB): 2.98% of the portfolio
  16. Hansen Natural (HANS): 2.49% of the portfolio
  17. SAIC (SAI): 1.2% of the portfolio
  18. Eagle Materials (EGLE): 1.1% of the portfolio
  19. Sears Holdings (SHLD) Puts: 0.31% of the portfolio
  20. Dicks Sporting Goods (DKS): 0.76% of the portfolio

This is the fourth hedge fund we've covered in our 3rd quarter 2008 edition of our hedge fund tracking series in which we're tracking 35+ prominent funds. We've already covered Whitney Tilson's T2 Partners, Peter Thiel's Clarium Capital, and Bill Ackman's Pershing Square. Stay tuned this week and next week as we detail the portfolio holdings of more funds. Overall, its been one of the worst years ever for hedge funds, as we noted in our recent October hedge fund performance update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out. Here are some funds to look forward to that we will be tracking: David Einhorn's Greenlight Capital, Lee Ainslie's Maverick Capital, Paul Tudor Jones' Tudor Investment Corp, Louis Bacon's Moore Capital Management, and many, many more.

More on Stephen Mandel and Lone Pine Capital:
- Lone Pine takes 6.8% stake in Dolby (DLB)
- Lone Pine's 2nd quarter 2008 portfolio holdings & 13f analysis
- October Hedge Fund performance numbers
- Julian Robertson (Mandel's mentor) reveals some recent buys
- 'Tiger Cub' Hedge Fund Panel (investment ideas)
- September Hedge Fund performance numbers

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