We recently compiled a list of the Top 10 Stocks to Buy According to Lone Pine Capital. In this article, we are going to take a look at where Meta Platforms, Inc. (NASDAQ:META) stands against the other stocks.
Lone Pine Capital, established in 1997 by Stephen Mandel, is a leading hedge fund and investment advisory firm based in Greenwich, Connecticut. The firm also operates offices in major financial hubs, including London, New York City, and San Francisco. Over the years, Lone Pine Capital has built a strong reputation in the investment world, focusing on long-term growth strategies. The firm’s disciplined approach to stock selection and asset management has enabled it to maintain a significant presence in the hedge fund industry.
Stephen Mandel, the founder of the firm, has had an extensive career in finance even before launching Lone Pine Capital. He previously worked as a managing director at Tiger Management, gaining valuable experience in investment strategy. A graduate of Dartmouth College with a degree in government, Mandel later earned an MBA from Harvard University. His expertise and leadership led to his ranking in the highest-earning categories among Forbes’ top hedge fund managers multiple times between 2012 and 2018. Although Mandel stepped away from active investment management in 2019, he continues to serve as a managing director at the firm. As of Q4 2024, Lone Pine Capital managed nearly $13.5 billion in 13F securities spread across 30 companies, with its top 10 holdings accounting for 55.89% of its portfolio.
Lone Pine Capital’s investment philosophy is rooted in identifying transformative changes that can unlock or accelerate value. By leveraging institutional knowledge and deep expertise across sectors and global markets, the firm continuously reassesses its investment theses and uncovers new opportunities. It strategically times market entry by recognizing key turning points in economic and industry cycles, allowing it to capitalize on shifts before they become widely apparent. The firm also prioritizes long-term value creation, typically holding investments for two to three years, though it has held stocks of certain companies for decades. This disciplined approach aligns investment timelines with investor expectations, optimizing returns. Additionally, Lone Pine Capital remains highly responsive to innovation in various forms—whether through technological advancements, business model evolution, or leadership changes—adapting its strategies based on emerging data and shifting market dynamics.
Moreover, the hedge fund’s investment strategies are designed to achieve long-term capital appreciation through a disciplined and research-driven approach. For its long-only strategy, the firm focuses on high-conviction investments in companies with strong growth potential, maintaining a diversified portfolio primarily across North America and Europe while limiting exposure to emerging markets. Its long/short equity strategy follows a similar approach, combining concentrated long positions with a diversified selection of short investments to navigate market fluctuations effectively. Net exposure varies based on market conditions and available opportunities, ensuring flexibility in positioning. In private investments, the firm applies its extensive research capabilities to identify promising companies in sectors such as software, financial technology, healthcare, and consumer markets. By targeting capital-efficient businesses with significant public market potential, Lone Pine Capital seeks to maximize returns through selective, high-impact investments.
Our Methodology
The stocks discussed below were picked from Lone Pine Capital’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1008 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A team of developers working in unison to create the company’s messaging application.
Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders as of Q4: 262
Lone Pine Capital’s Equity Stake: $1.19 Billion
Meta Platforms, Inc. (NASDAQ:META), a leading multinational technology conglomerate based in Menlo Park, California, operates major social media platforms such as Facebook, Instagram, Threads, and WhatsApp. The company reported outstanding Q4 2024 financial results, with revenue increasing 21% year-over-year to $48.4 billion, surpassing Wall Street’s $47 billion projection. Earnings per share (EPS) surged by 50% to $8.02, well above the expected $6.76, initially driving Meta’s stock up by nearly 9%, though some gains were later trimmed. The company’s digital advertising segment remains its primary revenue driver, bolstered by its advanced artificial intelligence (AI) tools that enhance content recommendations and ad targeting, further strengthening its competitive position.
Investor confidence in Meta Platforms, Inc. (NASDAQ:META) continues to rise, as institutional interest in the stock has grown significantly. By the end of Q4 2024, Lone Pine Capital held over 2 million shares valued at approximately $1.19 billion, making it one of Stephen Mandel’s top investment choices. Hedge fund interest has also surged, with 262 funds tracked by Insider Monkey collectively holding stakes worth more than $59.38 billion, up from 235 funds in the previous quarter. This increased institutional backing underscores strong expectations for Meta’s long-term growth, supported by its advancements in AI and its dominant position in the social media and digital advertising markets.
Meta Platforms, Inc. (NASDAQ:META) is rapidly expanding its digital advertising market share by leveraging AI-driven solutions, which contributed to a 22% revenue increase in 2024—double the industry’s growth rate. AI-powered tools have significantly improved ad targeting, creativity, and efficiency, leading to a 32% rise in advertiser return on investment (ROI) and a 17% reduction in customer acquisition costs. Advertiser adoption of Meta’s AI solutions has quadrupled in just six months, with ad prices rising 14% in Q4. As the company continues to develop AI innovations, such as video generation technology, and with the digital advertising market projected to reach $513 billion by 2027, Meta Platforms, Inc. (NASDAQ:META) is well-positioned for sustained growth in the coming years.
Rowan Street Capital stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q4 2024 investor letter:
“Meta Platforms, Inc. (NASDAQ:META): Investment Initiated: April 2018: Internal Rate of Return (IRR*): 22% *IRR represents the annualized rate of return on an investment, accounting for the timing and magnitude of cash flows over the holding period.
For META, our 22% IRR aligns closely with the company’s compounded growth in earnings per share (EPS) and free cash flow per share during the 6 years holding period.
Looking ahead, Meta is expected to grow its revenues, earnings, and free cash flow per share at mid-teens rates over the next two years. There’s a good possibility that it could exceed these estimates, considering the breadth of growth initiatives currently in place, such as advancements in Al, monetization of Reels, expansion into business messaging, and the ongoing development of the metaverse…” (Click here to read the full text)
Overall META ranks 1st on our list of the stocks to buy according to Lone Pine Capital. While we acknowledge the potential for META as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than META but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
