Here Are This Elite Fund’s Top 5 Stock Picks

In this article, we discuss the top five stock picks of Stephen Mandel’s Lone Pine Capital. To read the performance and investment philosophy of the firm, go directly to Here Are This Elite Fund’s Top 10 Stock Picks.

5. Microsoft Corporation (NASDAQ:MSFT)

Percentage of Lone Pine Capital’s Stock Portfolio: 5.51%

Microsoft Corporation (NASDAQ:MSFT) is a Washington-based multinational corporation that offers software products, services, and hardware products.

On November 20, Wedbush Securities analyst Dan Ives reaffirmed an Outperform rating and a $425 price target on Microsoft Corporation (NASDAQ:MSFT) stock. The firm commented that the company’s decision to hire Sam Altman and Greg Brockman for AI research has made it stronger with regard to the AI segment. 

On November 15, Microsoft Corporation (NASDAQ:MSFT) introduced its first-ever two in-house processors, the Maia 100 chip and the Cobalt 100 chip. The chips will help the corporation to compete with semiconductor and data center companies like NVIDIA Corporation (NASDAQ:NVDA), Intel Corporation (NASDAQ:INTC), and Advanced Micro Devices, Inc. (NASDAQ:AMD).

Jackson Peak Capital mentioned Microsoft Corporation (NASDAQ:MSFT) in its third quarter 2023 investor letter. Here is what it said:

“The Microsoft Corporation (NASDAQ:MSFT)/Activision Blizzard, Inc. (NASDAQ:ATVI) merger arbitrage came to a successful conclusion with the court denying the FTC’s preliminary injunction request. The deal subsequently received approval from the UK CMA and closed in October. The ATVI position was an example of “staying around the hoop” of a significant arb opportunity. At first, the position led to a small loss in Q2 when the UK CMA initially blocked the deal in April, but we stayed close to the case, analyzed the FTC trial and scaled up the ATVI position as it became apparent FTC had a weak case, meaning the probability of the deal going through was mispriced by the market since the companies would likely find a solution to work with the UK CMA (only global regulator who had an issue) if the FTC lost.”

4. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Percentage of Lone Pine Capital’s Stock Portfolio: 6.53%

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a manufacturer and seller of integrated circuits and wafer semiconductor devices. In 2022, the company provided its products to 532 customers and had a manufacturing capacity of more than 15 million 12-inch equivalent wafers.

On November 14, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) announced a quarterly dividend of NT$3.50 (NT$1 = $0.032) per share, payable by April 11, 2024, to the shareholders of record on March 18, 2024. The dividend yield of the company is 2.17% at the time of writing on November 20.

On November 13, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) announced that its October net revenue increased 34.8% month-over-month (MoM) to nearly NT$243.2 billion while the net revenue grew 15.7% year-over-year (YoY).

Wedgewood Partners talked about Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its third quarter 2023 investor letter. Here is what it said:

“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) detracted from performance, as revenues declined 10% from a year ago. The Company is lapping revenue growth of over +40% (compared to 2022) during every quarter of 2023, so it is more instructive to look at the health of the business through the lens of a multi-year timeframe. Most of the Company’s customers have seen near-term weakness in demand due to pandemic normalization. However, we think the longer-term trend of more silicon per device is still very much intact, and the Company is well-positioned to serve this, given its commanding market share in leading edge capacity. The Company’s aggressive investment in leading-edge equipment combined with tight development with fabless IC designers, plus the embrace of open development libraries, should continue to foster a superior competitive position and attractive long-term growth.”

3. Mastercard Incorporated (NYSE:MA)

Percentage of Lone Pine Capital’s Stock Portfolio: 6.66%

Mastercard Incorporated (NYSE:MA) is one of the two largest payment-processing companies in the world, the other one being Visa Inc. (NYSE:V), which Lone Pine Capital sold out of in the third quarter of 2023. However, the firm increased its holdings in Mastercard Incorporated (NYSE:MA) by 49% in the same quarter to 1.746 million shares worth $691.394 million.

On October 26, Mastercard Incorporated (NYSE:MA) posted a non-GAAP EPS of $3.39, outperforming the estimates by $0.18. The company’s revenues were up 12.6% YoY to $6.53 billion, exceeding the estimates by nearly $6 million. The company’s worldwide gross dollar volume was up by 11%, and purchase transactions increased by 12% in the quarter. Since reporting its earnings, Mastercard Incorporated (NYSE:MA)’s stock price has been up by approximately 11% on November 20.

On November 20, Mastercard Incorporated (NYSE:MA) announced that its joint venture, Mastercard NUCC Information Technology, has received approval to start domestic bankcard clearing activity in China from the People’s Bank of China and the National Administration of Financial Regulation.

Here is what Baron FinTech Fund has to say about Mastercard Incorporated (NYSE:MA) in its Q3 2023 investor letter:

“Performance in Payments was bolstered by gains from Mastercard Incorporated. Shares of global payment network Mastercard were up modestly after reporting a continuation of double-digit earnings growth and resilient payment volumes.”

2. Amazon.com, Inc. (NASDAQ:AMZN)

Percentage of Lone Pine Capital’s Stock Portfolio: 6.69%

Amazon.com, Inc. (NASDAQ:AMZN) is an electronic device manufacturer, online retailer, and provider of web services.

On November 17, Amazon.com, Inc. (NASDAQ:AMZN) announced a partnership with Hyundai Motor Company (OTC:HYMTF) through which car dealers will be able to list their offerings on Amazon’s platform. BofA mentioned that this partnership will be beneficial for dealers and improve their lead generation.

Over the last three months, 40 Wall Street analysts covered Amazon.com, Inc. (NASDAQ:AMZN) stock, and all kept a Buy rating on the shares. The average price target is $175.51, showing an upside of 20.11% at the time of writing as of November 20.

Amazon.com, Inc. (NASDAQ:AMZN) was mentioned in Polen Capital’s third quarter 2023 investor letter. Here is what it said:

“Amazon continues to showcase it’s place as one of the most competitively advantaged companies in the world. The company has made significant progress in managing costs and better leveraging existing capacity, driving a strong recovery in its profitability. We think there’s additional room for improvement.

AWS growth seems to be stabilizing even while management continues to work with clients to optimize their infrastructure spend. Roughly 90% of global IT spending remains on premise. We believe this will eventually flip, with most IT spending ultimately moving to the cloud over time. We think AWS will be a significant beneficiary of this transition.

Further, our investment case on company profitability driven by AWS and advertising continues to unfold, delivering nearly $8 billion in free cash flow over the trailing twelve months and a net margin of 5%. We expect both to move higher with the mix shift of more profitable businesses growing fastest continuing to take effect.

At Amazon’s current price, we believe the company is well positioned to deliver a mid-teens or higher total shareholder return for our clients over the next five plus years without a Herculean effort from the business. It simply needs to continue executing on current businesses and growing into the capacity it built during and immediately after the pandemic.”

1. Meta Platforms, Inc. (NASDAQ:META)

Percentage of Lone Pine Capital’s Stock Portfolio: 8.04%

Meta Platforms, Inc. (NASDAQ:META), previously called Facebook Inc., is a conglomerate that provides social networking platforms, advertising services, and business insight solutions.

In the third quarter, Stephen Mandel’s Lone Pine Capital initiated a position in Meta Platforms, Inc. (NASDAQ:META) stock with approximately 2.78 million shares worth over $834.314 million, covering 8.04% of the hedge fund’s investment portfolio.

On November 10, Meta Platforms, Inc. (NASDAQ:META) announced a partnership with Amazon.com, Inc. (NASDAQ:AMZN) that will allow users to purchase products directly from ads on Facebook and Instagram. The partnership is expected to benefit the corporation as it will drive more advertisers to the apps. 

Weitz Investment Management mentioned Meta Platforms, Inc. (NASDAQ:META) in its third-quarter 2023 investor letter. Here is what it said:

“As for other quarterly contributors, Alphabet, Inc., (GOOG) and Meta Platforms, Inc. (NASDAQ:META) added to their exceptional year-to-date returns. Meta Platforms and Alphabet were the true year-to-date standouts. After steep declines in 2022, both stocks rebounded sharply due to a combination of solid fundamentals, disciplined operational execution, and improved sentiment. Despite outsized gains and attention, we think both Alphabet and Meta remain undervalued.”

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