Billionaire Stephen Mandel Remains Among Valeant Bulls; Betting Big on Tech in Q4

Billionaire Stephen Mandel‘s Lone Pine Capital lost money in the third quarter, although three of its funds: Lone Cypress, Lone Kauri, and Lone Tamarack declined by 3.5%, 3.6%, and 3.7%, respectively, outperforming the S&P 500, which slid by 6.4%. On the other hand, its Lone Cascade dropped by 9.6%. Nevertheless, Mandel remained confident in his top picks and took their decline as an opportunity to boost Lone Pine’s exposure to some of these companies. In this article we are going to take a look at Lone Pine’s top five holdings as reported in its latest 13F filing.

Lone Pine held an equity portfolio worth $24.55 billion at the end of September, down from $26.73 billion a quarter earlier. The investor had around half of that invested in technology and healthcare stocks. The reason we analyze Lone Pine’s equity portfolio is because we believe that imitating some of its long picks can help a retail investor outperform the market. In fact, we analyze the equity portfolios of some 730 investors and by identifying stocks that they are collectively bullish on, we have managed to obtain returns of 102% since August 2012. Our approach outperformed the broader market by more than 53 percentage points by imitating the 15 most popular small-cap stocks among the funds we track (see more details here).

The 20% drop in Valeant Pharmaceuticals Intl Inc (NYSE:VRX) was viewed by many hedge fund managers as an opportunity to buy more shares with the conviction that the problems faced by the pharmaceutical giant are short-term. Valeant Pharmaceuticals Intl Inc (NYSE:VRX)’s stock has lost another 50% since the end of the third quarter however, as more concerns about some of the company’s practices have arisen and short-sellers began targeting the vulnerable company. Nevertheless, Lone Pine acquired more than 2.15 million shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) between July and September, and reported ownership of 7.46 million shares valued at $1.33 billion in its latest 13F filing. Other shareholders of the company include billionaires Jeff Ubben of ValueAct Capital and Bill Ackman of Pershing Square.

On the other hand, in Priceline Group Inc (NASDAQ:PCLN), Lone Pine inched down its stake by 16% to 992,252 shares worth $1.23 billion. Priceline Group Inc (NASDAQ:PCLN)’s shares have advanced by over 12% since the beginning of the year as the company has posted better-than-expected results for the last several quarters. Billionaire Leon Cooperman’s Omega Advisors is also bullish on Priceline Group Inc (NASDAQ:PCLN), holding 115,025 shares. Last month, Omega Advisors reiterated its bullish position and projected an 18% growth rate for the company’s stock over the next three-to-five years.

Billionaire Stephen Mandel’s other top picks are represented by Charter Communications, Inc. (NASDAQ:CHTR), JD.Com Inc (ADR) (NASDAQ:JD), and Microsoft Corporation (NASDAQ:MSFT) and we are going to discuss them on the next page.

Next in line is Charter Communications, Inc. (NASDAQ:CHTR), in which Lone Pine increased its position by 1.17 million shares to 6.55 million shares worth $1.15 billion. Charter Communications, Inc. (NASDAQ:CHTR)’s stock has jumped by 12% since the end of September, amid the company reporting a GAAP profit of $0.48 per share for the previous quarter, versus a loss of $0.49 per share a year earlier. Warren Buffett also likes Charter Communications, Inc. (NASDAQ:CHTR) and added 1.77 million shares to Berkshire Hathaway’s holding in the company, holding 10.28 million shares as of the end of September.

As JD.Com Inc (ADR) (NASDAQ:JD)‘s stock slid by more than 23% between July and September, Lone Pine acquired some 1.61 million shares valued at more than $1.13 billion. JD.Com Inc (ADR) (NASDAQ:JD)’s position as one of the largest e-commerce companies in China should position it well for long-term gains. The stock is still 15% in the green year-to-date despite the drop over the last couple of months, and after China overcomes its current economic problems, the stock should reverse its trajectory and gain ground. The top three shareholders of JD.Com Inc (ADR) (NASDAQ:JD) that we track are Lei Zhang’s Hillhouse Capital Management, Chase Coleman’s Tiger Global Management and Lone Pine, with the former two holding 136.61 million shares and 57.53 million shares, respectively.

Finally, Microsoft Corporation (NASDAQ:MSFT) represented Lone Pine’s fifth-largest holding at the end of September. The investor amassed 25.34 million shares worth $1.12 billion, the position being reduced by 1.26 million shares in the third quarter. In a declining PC market, Microsoft Corporation (NASDAQ:MSFT) has managed to perform strongly, focusing on cloud computing and software, both of which are showing signs of growth. Microsoft’s latest Windows OS was very well received by customers and the switch of its Office suite to a subscription-based service is also considered by analysts as a smart move that should result in more customers, and as a result, more revenue for the company. One of the largest shareholders of Microsoft Corporation (NASDAQ:MSFT) is ValueAct Capital, which owns 75.27 million shares.

Disclosure: None