Hedge Fund Lone Pine Capital Boosts Stake in Estee Lauder (EL) ~ market folly

Tuesday, June 29, 2010

Hedge Fund Lone Pine Capital Boosts Stake in Estee Lauder (EL)

Yesterday after the market close, Stephen Mandel's hedge fund firm Lone Pine Capital filed a 13G on Estee Lauder (EL). This filing discloses activity as of June 17th, 2010 and reveals that Lone Pine has a 5.0% ownership stake in EL with 6,105,520 shares. This is a sizable increase in their position from when we last looked at Lone Pine's portfolio. Back on March 31st, Mandel's hedge fund owned 3,498,677 shares. Over the course of the past three months, Lone Pine has added 2,606,843 more shares (a 74.5% increase in their position size). In terms of other recent portfolio activity from Mandel, we noted he started a new position in Longtop Financial Technologies (LFT) a few months ago as well.

The interesting thing to note about their Estee Lauder position is that they've been gradually building it up over time. Looking from the fourth quarter in 2009 to the first quarter of 2010, Lone Pine had previously boosted their position by 14%. And before that (from the third quarter of '09 to the fourth quarter of '09) they had tripled their stake. And now, with this most recent increase, it's obvious they have conviction in this pick. This stock becomes all the more interesting when you consider some other hedge funds are bullish on shares of EL as well.

As we've covered previously, David Stemerman's hedge fund Conatus Capital owns Estee Lauder as one of their top five US equity longs. Given his concurrent investment, it should come as no surprise that before founding Conatus, Stemerman previously worked at Lone Pine. So, he has carried conviction in this stock over to his new firm which launched last year with $2.3 billion. Consumer companies are essentially Lone Pine's specialty and Estee Lauder is the perfect example of this mold. Given that Lone Pine has continued to ramp up its stake, it will be intriguing to see whether or not Conatus has done the same.

Last year, Lone Pine's main fund (Lone Cypress) was up 17.7% as detailed our hedge fund performance numbers summary. Their Lone Kauri Fund was up 12.1%, their Lone Cascade Fund was up 44.4%, and their Lone Dragon Pine Fund was up 72.9%. For other investment ideas from Mandel's hedge fund, we previously saw that they are bullish on education plays as well.

Taken from Google Finance, Estee Lauder is "a manufacturer and marketer of skin care, makeup, fragrance and hair care products. Its products are sold in over 140 countries and territories under the brand names, which include Estee Lauder, Aramis, Clinique, Origins, MzAzC, Bobbi Brown, La Mer and Aveda."

Head to Lone Pine Capital's portfolio to see what else Stephen Mandel has invested in.

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