Billionaire Stephen Mandel’s Long Term Stock Picks Include Priceline.com Inc (PCLN)

We track quarterly 13F filings from hundreds of hedge funds and other notable investors, including billionaire and Tiger Cub Stephen Mandel’s Lone Pine Capital, as part of our work researching investment strategies (we have found, for example, that the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year). In addition, while we don’t recommend blindly following anybody, 13Fs can provide interesting insights into how individual managers view the market and what stocks they like. Of course, by now Lone Pine’s most recent 13F is fairly old (it discloses many of the fund’s long equity positions from the end of March) but we can use our database to find stocks that Mandel has owned for the last two years on the theory that he probably still owns these names. Read on for our quick take on the five largest positions from the most recent 13F which Lone Pine had at least $180 million invested in at the end of March 2011 or see the full list of stocks the fund reported owning.

Priceline.com Inc (NASDAQ:PCLN) was Mandel’s largest position according to the most recent 13F, and the travel website has in fact been quite popular among other Tiger Cubs as well; John Griffin’s Blue Ridge Capital, for example, owned about 450,000 shares at the end of Q1 (research more stocks Blue Ridge owns). Lone Pine began buying the stock about two years ago. Priceline.com Inc (NASDAQ:PCLN) trades at 31 times trailing earnings, but the company has continued to deliver strong growth with revenue and earnings both up over 25% from their levels a year ago going by recent reports. As such it’s still worth considering as a growth stock.

The fund slightly increased its holdings of Dollar General Corp. (NYSE:DG) between January and March, to a total of over 14 million shares. Growth has actually been somewhat low at the discount retailer, which is troubling from a value point of view when combined with the fact that the trailing earnings multiple is 19. We would note that Dollar General Corp. (NYSE:DG) has a beta of only 0.1 indicating that its stock price has almost no correlation with the overall market. Tiger Global Management initiated a position in Dollar General Corp. (NYSE:DG) in the first quarter of the year (check out Tiger Global’s stock picks).

Lone Pine cut its stake in Cognizant Technology Solutions Corp (NASDAQ:CTSH) during the quarter but the $22 billion market cap IT consulting company remained one of the fund’s ten largest holdings. Cognizant Technology Solutions Corp (NASDAQ:CTSH) recorded double-digit growth rates in both revenue and net income in the first quarter of 2013 versus a year earlier. While the trailing earnings multiple is 20, Wall Street analysts expect earnings growth to continue over the next several years with the result being a five-year PEG ratio just below 1. Billionaire Ken Griffin’s Citadel Investment Group had 1.7 million shares in its portfolio according to its own 13F (find Griffin’s favorite stocks).

The fund has also been a long term investor in QUALCOMM, Inc. (NASDAQ:QCOM). The tech stock is another company which has been growing nicely; in its most recent quarterly report, revenue and income from continuing operations rose about 20% compared to the same period in the previous fiscal year. The trailing and forward earnings multiples are 17 and 13, respectively. QUALCOMM, Inc. (NASDAQ:QCOM) had been one of the most popular stocks among hedge funds in the first quarter of 2013 (review the full top ten list according to our data) and it does look to be growing enough to be worth investigating at the current price.

Mandel and his team owned over 3 million shares of Ralph Lauren Corp (NYSE:RL) both in their most recent filing and in the one from two years prior. As with many apparel designers (as well as retailers) markets give Ralph Lauren Corp (NYSE:RL) a fairly premium valuation- even in terms of forward estimates the P/E multiple is 18. While earnings have been up, revenue growth has been more modest and so we’d be concerned that future growth might not be sustainable if it continues to come from wider net margins alone. Bain Capital’s equity hedge fund Brookside Capital owned about 850,000 shares of Ralph Lauren Corp (NYSE:RL) at the beginning of April.

Disclosure: I own no shares of any stocks mentioned in this article.