Sahm Adrangi's 2 Long Ideas at Capitalize For Kids Sohn Canada Conference

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Sahm Adrangi of Kerrisdale Capital who pitched two long ideas.


Sahm Adrangi's Sohn Canada Presentation

Address the crowd regarding his recent GSAT short. Mentioned holding your own conference/presentation is a good way to articulate your point.

Pitched LONG SS&C Technologies Holdings (SSNC). It’s a hedge fund administrator company, considered one of the top 5 companies. Very sticky customer base – similar to the way firms don’t change accountants, funds also avoid changing fund administrators, enormous hassle and data/history is often hard to transfer from one to another. Believes the company should trade at 20x FCF and has grown over 20% Revenue CAGR last 10 year (from organic growth). Posted any average retention rate of 90%, again, highlighting the stickiness of the business.

Next, pitched LONG Cognizant Technology Solutions (CTSH). This is a high performing IT service business which has recently experienced a weak quarter. Operations in India, causing a low cost provide advantage. Enjoys multi-year contracts to ensure a steady revenue stream and has a $3.5B contract over 7 years (health net). Price target of $70 using DCF valuation.

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

Lone Pine Capital Adds to Cognizant Technology Solutions Position

Steve Mandel's hedge fund firm Lone Pine Capital has filed a 13G on shares of Cognizant Technology Solutions (CTSH).  Per the filing, Lone Pine now owns 5.3% of the company with over 32.1 million shares.

This means they've boosted their position size by over 2.6 million shares since the end of the second quarter.  The filing was made due to activity on August 6th.  Shares recently dropped from $50 down to $42 and they took advantage of the decline.  CTSH has been one of Lone Pine's top holdings for quite some time.

You can view the rest of Lone Pine's portfolio in the brand new issue of our Hedge Fund Wisdom newsletter.

Per Google Finance, Cognizant Technology Solutions is "a provider of custom information technology, consulting and business process outsourcing services. The Company is engaged in Business, Process, Operations and Information Technology Consulting, Application Development and Systems Integration, Enterprise Information Management (EIM), Application Testing, Application Maintenance, Information Technology Infrastructure Services, and Business and Knowledge Process Outsourcing, or BPO and KPO. The Company operates in four segments: Financial Services; Healthcare; Manufacturing, Retail and Logistics, and Other, which includes communications, information, media and entertainment, and high technology."

Lone Pine Capital's Current Investment Themes

Today we're covering the current investment themes from Steve Mandel's hedge fund Lone Pine Capital.


*Update: excerpt removed per request by representatives of Lone Pine


In more recent portfolio activity, we've detailed how Lone Pine nearly doubled its SolarWinds (SWI) stake and has been buying the dip in VanceInfo Technologies (VIT).

Stephen Mandel's Lone Pine Capital Buys the Dip in VanceInfo Technologies (VIT)

Stephen Mandel's hedge fund firm Lone Pine Capital has been busy buying lately. In an amended 13G just now filed with the SEC, Lone PIne has disclosed a whopping 17.6% ownership stake in VanceInfo Technologies (VIT) with 7,862,536 shares.

Per portfolio activity on August 19th, Mandel's hedge fund has ramped up its position size by buying an additional 7.5% of the company. We recently covered how Lone Pine bought VIT in late July and back in late 2010 as well.

Lone Pine Likes Information Technology

Since Lone Pine's additional buy just three trading days ago, shares of VIT are down a little lower around $11.84. VIT operates in the information technology sector and some investors seem to think that the company's underlying business could be slowing down at a rapid rate, given that more than half their business is in China.

Lone Pine also has a large position in another information technology company. The hedge fund has long held a stake in Cognizant Technology Solutions (CTSH) and it's their second largest US equity long position as detailed in our brand new issue of Hedge Fund Wisdom.

A solid portion of Lone Pine's position in VIT is in its Lone Dragon Pine fund, which focuses on emerging markets. For other buys from this hedge fund, yesterday we posted up their position in Michael Page International.

Per Google Finance, VanceInfo "is an information technology (IT) service provider and an offshore software development company in China. The Company’s range of IT services includes research and development services, enterprise solutions, application development and maintenance (ADM), testing, as well as globalization and localization."

David Stemerman's Hedge Fund Conatus Capital Favors Tech: 13F Filing

(This post is part of our series on tracking hedge fund portfolios. If you're unfamiliar with tracking investments they disclose via SEC filings, check out our series preface on hedge fund filings.)

Next up is David Stemerman's hedge fund Conatus Capital. Stemerman founded his firm last year with $2.3 billion after he left Stephen Mandel's Lone Pine Capital. Conatus places an emphasis on bottom-up individual stockpicking via a long/short equity strategy. Stemerman's firm focuses on the quality of the business and the quality of the associated management team. They seek short positions by identifying companies that are seeing increased competition from low-cost alternatives and those that are being displaced by new technology. We've previously taken a more in-depth look at Conatus' investment process for those interested. For 2009, Stemerman's firm finished up 19.16% as detailed in our hedge fund performances post.

The positions listed below were their long equity, note, and options holdings as of March 31st, 2010 as filed with the SEC. All holdings are common stock unless otherwise denoted:


Brand New Positions
JPMorgan Chase (JPM)
Union Pacific (UNP)
American Tower (AMT)
US Bancorp (USB)
FMC Technologies (FTI)
City National (CYN)
Mead Johnson Nutrition (MJN)
Sotheby's Holdings (BID)
Charles Schwab (SCHW)
Webmd Health (WBMD)


Increased Positions
BHP Billiton (BHP): Increased position size by 103%
Ctrip.com (CTRP): Increased by 94.4%
Wells Fargo (WFC): Increased by 91.8%
Amazon.com (AMZN): Increased by 84%
Schlumberger (SLB): Increased by 73%
Bed Bath & Beyond (BBBY): Increased by 58.5%
Visa (V): Increased by 54.9%
Goldman Sachs (GS): Increased by 52.5%
NetApp (NTAP): Increased by 48.5%
Urban Outfitters (URBN): Increased by 38.4%
Google (GOOG): Increased by 35%
Polo Ralph Lauren (RL): Increased by 35%
Walter Energy (WLT): Increased by 29.4%
Salesforce.com (CRM): Increased by 25.9%
Citrix Systems (CTXS): Increased by 23.6%
Crown Castle (CCI): Increased by 20.8%


Reduced Positions
Priceline.com (PCLN): Reduced position size by 34.4%


Positions They Sold Out of Completely
Abercrombie & Fitch (ANF)
Credicorp (BAP)


Top 15 Holdings (by percentage of assets reported on 13F filing)

1. Apple (AAPL): 5.6%
2. Express Scripts (ESRX): 4.4%
3. Google (GOOG): 3.9%
4. Estee Lauder (EL): 3.9%
5. Cognizant Technologies (CTSH): 3.9%
6. Amazon.com (AMZN): 3.9%
7. Walter Energy (WLT): 3.9%
8. Cisco Systems (CSCO): 3.8%
9. Medco Health (MHS): 3.8%
10. Schlumberger (SLB): 3.4%
11. Wells Fargo (WFC): 3.3%
12. Visa (V): 3.3%
13. Covidien (COV): 3.2%
14. JPMorgan Chase (JPM): 2.8%
15. Bed Bath & Beyond (BBBY): 2.8%


As you can see, Conatus Capital did little in the way of selling in the first quarter of 2o10. In fact, they were quite active on the buying side, adding to numerous existing stakes like BHP Billiton, Ctrip.com, Wells Fargo, and Amazon.com. They also started brand new stakes in JPMorgan Chase, Union Pacific, and American Tower among others. Given the recent market decline, it will be intriguing to see next time around whether Conatus was reducing long exposure or if they continued to add.

Since Stemerman previously plied his trade at Stephen Mandel's Lone Pine Capital, it should come as no surprise that this portfolio has obvious similarities to Lone Pine's. While the typical 'hedge fund favorite stocks' like Apple and Amazon are present, both Conatus and Lone Pine are bullish on shares of Estee Lauder and Cognizant Technologies, names we don't see as frequently in hedge fund portfolios.

Lastly, we want to point out the three sectors Conatus seems to like the most: technology, health, and energy. They own the typical tech bellwethers in Apple, Google, Cisco, and Amazon. But at the same time, they're focusing on niche segments like cloud computing. Shifting to pharmacy benefit management companies (PBMs), Conatus has a large position in Express Scripts, a company we saw fellow hedge fund Viking Global heavily favors. Additionally, Conatus is long Medco Health as their ninth largest US equity long. In energy, Conatus likes Schlumberger and Walter Energy. In the end though, technology is by far and away the overwhelming theme as five of their top ten positions are in tech.

As we've previously detailed, Conatus is bullish on cloud computing and this is evident from their positions in VMWare, Citrix Systems, and NetApp. And as we've also highlighted, hedge funds favor wireless tower stocks and Conatus is no different: they own all three majors in American Tower, Crown Castle, and SBA Communications.

Assets reported on the 13F filing were $2.6 billion this quarter. Data from the SEC is aggregated and sorted automatically by Alphaclone, our source for hedge fund tracking, replicating, and performance backtesting (Market Folly readers can receive a special free 30 day trial). Remember that these filings are not representative of the hedge fund's entire base of AUM.

This post is part of our daily hedge fund portfolio tracking series. We've already detailed activity from numerous managers so click the links below to be taken to the respective portfolio updates: Seth Klarman's Baupost Group, Warren Buffett's Berkshire Hathaway, Stephen Mandel's Lone Pine Capital, and Bill Ackman's Pershing Square, David Einhorn's Greenlight Capital, Eddie Lampert's RBS Partners, David Tepper's Appaloosa Management, Mohnish Pabrai's Investment Fund, John Griffin's Blue Ridge Capital, Lee Ainslie's Maverick Capital, Bruce Berkowitz's Fairholme Capital Management, Andreas Halvorsen's Viking Global, Dan Loeb's Third Point, John Paulson's hedge fund Paulson & Co, Chase Coleman's Tiger Global, Roberto Mignone's Bridger Management, and Phil Falcone's Harbinger Capital Partners. Be sure to check back daily for new hedge fund updates.

Stephen Mandel's Lone Pine Capital Discloses Large New Stake in Cognizant Technology Solutions (CTSH): 13F Filing

(This post is part of our series on tracking hedge fund portfolios. If you're unfamiliar with tracking investments they disclose via SEC filings, check out our series preface on hedge fund filings.)

Next up is Stephen Mandel's hedge fund Lone Pine Capital. Mandel's firm is named after a historical lone pine tree at his alma mater, Dartmouth College. Before founding his own firm, Mandel worked at Julian Robertson's legendary Tiger Management and he seeks to identify companies with good management teams that are trading below intrinsic value. Recent activity out of Lone Pine includes a new stake in Longtop Financial Technologies (LFT) as well as a new position in Live Nation Entertainment (LYV).

For 2009, Lone Pine's main fund Lone Cypress was up 17.7% as noted in our hedge fund performance numbers post. Additionally, their Lone Kauri was up 12.1%, Lone Cascade up 44.4%, and Lone Dragon Pine up 72.9%. For other investment ideas from Mandel's hedge fund, we previously saw that they are bullish on education plays as well.

The positions listed below were Lone Pine's long equity, note, and options holdings as of March 31st, 2010 as filed with the SEC. All holdings are common stock unless otherwise denoted:


Brand New Positions
Cognizant Technology Solutions (CTSH)
DaVita (DVA)
United Parcel Service (UPS)
Ameriprise Financial (AMP)
Coca Cola (KO)
Activision Blizzard (ATVI)
Amazon (AMZN)
Polo Ralph Lauren (RL)
Amphenol (APH)
Walter Energy (WLT)
Salesforce.com (CRM)
Live Nation (LYV) ~ we covered this back when they bought it
Longtop Financial Technologies (LFT) ~ we also previously detailed this new stake
PNC Financial (PNC)
O'Reilly Automotive (ORLY)
Apollo Group (APOL)
Invesco (IVZ)
Wyndham Worldwide (WYN)
Umpqua Holdings (UMPQ)


Increased Positions
New Oriental Education (EDU): Increased by 238.2%
Mead Johnson Nutrition (MJN): Increased by 127.1%
Autodesk (ADSK): Increased by 119.8%
Yum Brands (YUM): Increased by 87.8%
Pactiv (PTV): Increased by 74.42%
Wells Fargo (WFC): Increased by 33.9%
Accenture (ACN): Increased by 31.8%
CVS Caremark (CVS): Increased by 16.7%
Qualcomm (QCOM): Increased by 14.7%
Estee Lauder (EL): Increased by 14.6%
Dr Pepper Snapple (DPS): Increased by 7%
Bank of America (BAC): Increased by 5.22%
JPMorgan Chase (JPM): Increased by 1.88%


Reduced Positions
Monsanto (MON): Reduced position by 63.6%
Green Mountain Coffee Roasters (GMCR): Reduced by 59%
Popular (BPOP): Reduced by 47.5%
Hewlett Packard (HPQ): Reduced by 42.5%
Baxter International (BAX): Reduced by 39.4%
Staples (SPLS): Reduced by 38.2%
Visa (V): Reduced by 33.5%
Goodrich (GR): Reduced by 21.6%
Mindray Medical (MR): Reduced by 18%
Citrix Systems (CTXS): Reduced by 11.8%
McDonald's (MCD): Reduced by 8.76%
Apple (AAPL): Reduced by 7%
Strayer Education (STRA): Reduced by 5.05%


Positions They Sold Out of Completely
HSBC Holdings (HBC)
Walgreen (WAG)
Walt Disney (DIS)
FLIR Systems (FLIR)
eBay (EBAY)
Discovery Communications (DISCA)
Precision Castparts (PCP)
MSCI (MXB)
Schein (HSIC)
Southwestern Energy (SWN)
Smithfield Foods (SFD)
VistaPrint (VPRT)
Melco Crown (MPEL)
E*Trade Financial (ETFC)
Marvel (MVL)
Grupo Aeroportuario Pacifico (PAC)
Grupo Aeroportuario Sure (ASR)
Deltek (PROJ)


Top 15 Holdings (by percentage of assets reported on 13F filing)

1. JPMorgan Chase (JPM): 7.73%
   
2. Qualcomm (QCOM): 5.72%
   
3. Cognizant Technology Solutions (CTSH): 5.39%
   
4. Apple (AAPL): 5.36%
   
5. Accenture (ACN): 4.67%
   
6. Yum Brands (YUM): 4.56%
   
7. McDonald's (MCD): 4.50%
   
8. Wells Fargo (WFC): 4.43%
   
9. Baxter International (BAX): 3.57%
   
10. Visa (V): 3.21%
    
11. Strayer Education (STRA): 3.04%
    
12. DaVita (DVA): 2.86%
    
13. Bank of America (BAC): 2.65%
    
14. Hewlett Packard (HPQ): 2.53%
    
15. New Oriental Education (EDU): 2.27%
    

Lone Pine's largest exposure by far is in the information technology sector, followed by consumer discretionary and financials. For us, the most notable change to Mandel's portfolio was the addition of a brand new position in Cognizant Technology Solutions (CTSH) that they made their third largest holding. Their new stake in DaVita (DVA) was also sizable.

Of positions they already owned, they added heavily to their holdings in New Oriental Education (EDU), Mead Johnson Nutrition (MJN), Autodesk (ADSK), Yum Brands (YUM), and Pactiv (PTV). We make special note of their increase in MJN as we had previously examined why hedge funds like Mead Johnson Nutrition. Many hedge funds owned it in the fourth quarter of 2009 and as you'll see from our continuing coverage of first quarter 2010 portfolios, tons of hedgies have shares of MJN in their portfolio this time around as well.

Of the positions Lone Pine sold out of completely, only HSBC (HBC), Walgreen (WAG), and Walt Disney (DIS) were previously sizable stakes. They also significantly reduced position sizes in some of the hedge fund favorite names such as Monsanto (MON), Green Mountain Coffee Roasters (GMCR), and Popular (BPOP).

Assets reported on the 13F filing were $10.3 billion this quarter. Data from the SEC is aggregated and sorted automatically by Alphaclone, our source for sorting through all the hedge fund portfolio maneuvers and backtesting the performance (Market Folly readers can receive a special free 30 day trial). Remember that these filings are not representative of the hedge fund's entire base of AUM.

This post is part of our daily hedge fund portfolio tracking series. We've already detailed activity from numerous managers so click the links below to be taken to the respective portfolio updates: Seth Klarman's Baupost Group as well as Warren Buffett's Berkshire Hathaway. Be sure to check back daily for new hedge fund updates.