Here’s How Stephen Mandel’s Lone Pine Capital Performed In Q1

Billionaire Stephen Mandel‘s Lone Pine Capital didn’t suffer the same fate in 2015 as most of its large hedge funds peers. While the firm didn’t generate astonishing returns during the year, its flagship Cypress fund and other smaller funds managed to safeguard investors’ money and close the year in green with high single-digit returns. However, it seems that the fund is having some trouble staying in the green amid an increase in volatility this year. Insider Monkey’s analysis of the fund’s 13F holdings in companies worth at least $1 billion shows that the 40 long positions held by the fund generated a weighted average loss of 3.9% during the first quarter. In this post, we are going to focus on Lone Pine Capital’s five largest holding going into 2016 and dissect how they performed individually in the first quarter.

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#5 Dollar Tree, Inc. (NASDAQ:DLTR)

– Shares Owned by Lone Pine Capital (as of December 31): 13.2 million

– Value of Holding (as of December 31): $1.01 billion

Lone Pine Capital initiated a stake in Dollar Tree, Inc. (NASDAQ:DLTR) during the third quarter and boosted it by 157% during the fourth quarter. With ownership of 4.18 million shares of the company, Charles Akre‘s Akre Capital Management trailed Lone Pine Capital as the largest shareholder of Dollar Tree, Inc. (NASDAQ:DLTR) at the end of December among funds covered by us. Shares of Dollar Tree traded in the $74-$82 for the most part of the first quarter, but managed to end the quarter with gains of 6.78%. For its fiscal 2015 fourth quarter, the company reported EPS of $1.01 on revenue of $5.37 billion versus analysts’ expectation of EPS of $1.07 on revenue of $5.41 billion. Despite the weaker than expected numbers, some analysts appreciated the progress made by the company in integrating its business with Family Dollar, which it had acquired last year. On March 25, analysts at Credit Suisse reiterated their ‘Underperform’ rating and $70 price target on the stock.

#4 Facebook Inc (NASDAQ:FB)

– Shares Owned by Lone Pine Capital (as of December 31): 9.78 million

– Value of Holding (as of December 31): $1.02 billion

Lone Pine Capital booked some profits in Facebook Inc (NASDAQ:FB) by reducing its stake in the company by 9% during the fourth quarter, when shares of Facebook Inc (NASDAQ:FB) broke above the $100 mark for the first time. Another fund to do so was Phill Gross And Robert Atchinson‘s Adage Capital Management, which brought its holding down by 6% to 3.23 million shares during the fourth quarter. Shares of the social media giant made their lifetime of $117.59 last quarter itself and ended the quarter with gains of 9.02%. The company is expected to report its fiscal 2016 first quarter by the end of this month and analysts project it to report EPS of $0.62 on revenue of $5.25 billion, significantly above the EPS of $0.42 on revenue of $3.54 billion that it had reported for the same quarter last year. On April 4, Deutsche Bank’s analyst Ross Sandler released a note to his clients in which he reiterated his ‘Buy’ rating and $145 price target on Facebook’s stock, but said that the company’s first quarter results may come in light” and provide investors an “opportunity to add to positions below current levels.”

#3 Priceline Group Inc (NASDAQ:PCLN)

– Shares Owned by Lone Pine Capital (as of December 31): 834,421

– Value of Holding (as of December 31): $1.06 billion

Going into 2015, Lone Pine Capital was extremely bullish on Priceline Group Inc (NASDAQ:PCLN) having increased its stake in the company by 92% to 1.4 million shares during the fourth quarter of 2014. However, it seems the fund had a sudden change of heart at the beginning of 2015 which caused it to reduce its stake the company in every single quarter of 2015 including the fourth quarter, when it brought its holding down by 16%. While Lone Pine Capital reduced its exposure to the company, billionaire Chase Coleman‘s Tiger Global Management LLC and billionaire Andreas Halvorsen‘s Viking Global initiated stakes in Priceline Group by purchasing 758,389 shares and 393,214 shares, respectively, during the fourth quarter. Owing largely to the rally witnessed in anticipation of the company’s fourth quarter results, shares of Priceline Group managed to end the  first quarter in the green with marginal gains of 1%. Most analysts who cover Priceline Group are currently bullish, citing the consistent growth the company has displayed and its positioning in the Chinese travel market, which is expected to grow phenomenally over the next few years. However, there are also a few analysts who are concerned about the growing trend in the hotel industry to shun online travel agencies (OTAs) and make direct bookings through their own portals.

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

– Shares Owned by Lone Pine Capital (as of December 31): 2.2 million

– Value of Holding (as of December 31): $1.49 billion

After initiating a stake in Amazon.com, Inc. (NASDAQ:AMZN) during the third quarter, Lone Pine Capital  raised it by 14% during the fourth quarter. Though  Amazon.com, Inc. (NASDAQ:AMZN)’s stock ended the first quarter down by over 12%, if Lone Pine didn’t buy more shares when the stock was falling, there is little chance that Lone Pine’s position would be in the red because the stock is still trading significantly above the high it topped in the third quarter. However, the same cannot be said about Michael Sidhom‘s Immersion Capital, which initiated a stake in the company during the fourth quarter by purchasing 236,256 shares. On April 5, Amazon’s founder and CEO sent a letter to the company’s shareholder defending the company’s corporate culture, which came under a lot of criticism after New York Times published a report on it last year in August. On the same day, Mr. Bezos also tweeted: “Heads up readers – all-new, top of the line Kindle almost ready. 8th generation. Details next week”. According to recent reports, the company is building a solar-charged Kindle case and the new Kindle will boast of a rechargeable protective case for extended battery life.

#1 Microsoft Corporation (NASDAQ:MSFT)

– Shares Owned by Lone Pine Capital (as of December 31): 27.26 million

– Value of Holding (as of December 31): $1.51 billion

Owing to the over 20% rise in its stock during the fourth quarter and Lone Pine Capital boosting its stake in the company by 8% during the same period, Microsoft Corporation (NASDAQ:MSFT) became Lone Pine Capital’s top stock pick going into 2016. Boykin Curry‘s Eagle Capital Management also increased its stake in the company, by 3% to 31.1 million shares, during the same period. While the broader market was extremely volatile in the first quarter, Microsoft Corporation (NASDAQ:MSFT)’s stock didn’t move much during that period and ended the quarter flat. Though most analysts consider Microsoft Corporation’s stock to be fully valued at $54, they are of the opinion that long-term investors can add more shares if there is a correction after the company reports its fiscal 2016 third quarter earnings on April 21. Currently, the projection on the Street is for the company to report EPS of $0.64 on revenue of $22.10 billion for the quarter, slightly better than the EPS of $0.61 on revenue of $21.73 billion it had reported for the same quarter of the previous financial year. More than the financial numbers, investors and analysts are eagerly waiting for the company to report the subscription numbers for Office 365 and its cloud platform, Azure, because if they are growing as expected it will mean that Microsoft Corporation is moving on the right track.

Disclosure: None