Billionaire Stephen Mandel, founder of Lone Pine Capital, is one of the most notable tiger cubs. Mandel left Julian Robertson and Tiger Management in 1997 to start Lone Pine. Mandel’s firm currently manages around $20 billion, utilizing a strategy that includes a long-only focus with a particular interest in disruptive technologies. In looking over Lone Pine’s recent 13F filing we found it particularly interesting that Mandel has made some notable investments beyond the tech sector and in stocks of heavy equipment and heavy product manufacturers. Check out this Tiger Cub’s newest stock picks.
Lone Pine owns over 3.5 million Wabco Holdings Inc. (NYSE:WBC) shares, which make up over 1.2% of the fund’s 13F portfolio. The auto parts manufacturer trades at 13x earnings, which is in line with other manufacturers. Wabco is expected to continue rebounding nicely after being up 40% year to date. The auto parts company recently revised the low end of its 2012 EPS guidance from $4.42 to $4.54 and is expected to grow five-year EPS at 20% annually, making it a very attractive value play with a 0.7 PEG ratio. Famed billionaire investor Warren Buffett also took a new position in the equipment company during the third quarter (check out all of Warren Buffett’s new 3Q picks).
B/E Aerospace Inc (NASDAQ:BEAV) was a 10% increase in shares for Lone Pine’s 13F. The airline parts company trades at 23x earnings, in line with top competitor TransDigm, but above other smaller manufacturers. The outlook for the airline industry is positive based on an improving global economy. B/E’s forward P/E of 14x makes the parts company a good value play. B/E also has some very impressive earnings growth potential, expected to be 23% annually over the next five years, putting its price-to-earnings to growth ratio at a mere 0.7. Fellow billionaire Steven Cohen of SAC Capital took notice of B/E during 3Q, upping his firms stake by over 3,000% (check out Cohen’s top moves).
Colfax Corp (NYSE:CFX) was a new position during 3Q for Lone Pine. The gas and fluid product company trades in line with major peers based on its forward P/E of 20x, but on a P/S (1.0x) basis, Colfax trades well below its industry. With a robust expected five-year growth rate of 27% the stock presents a solid growth at a reasonable price opportunity with a PEG of 1.0. The outlook for the industrial oil and gas products industry is positive as a stronger economy drives energy consumption.
Lone Pine owned over five million shares of Oceaneering International (NYSE:OII) at the end of 3Q. The offshore oil and gas products company pays a 1.4% dividend yield and trades at 21x earnings. Investors appear to be over discounting Oceaneering’s 19% expected growth rate and the oilfield company only trades at 14x forward earnings. Driving the long-term growth of Oceaneering will be the expected influx of offshore rigs through 2014, as offshore tends to be a higher margin business. Billionaire fund manager Ken Fisher is another one of the top investors in Oceaneering (check out Ken Fisher’s 7 dividend picks).
Lone Pine owned over 2.9 million shares of Tractor Supply Company (NASDAQ:TSCO) at the end of 3Q. The farm retailer operates in a niche market with little competition. Trading at 25x trailing earnings and only 21x forward earnings, the stock is another good value play. Although Tractor Supply has the lowest five-year expected growth rate of Mandel’s five picks listed, it still has a robust growth rate of 17%. 2013 revenues are expected to be up 11% driven by over 100 new stores and same store sales growth of 5%.
Mandel had good company as a fellow Wabco shareholder in Warren Buffett, and we see a rise in auto sales helping to drive the company moving forward. B/E should see positive growth from a general rise in the global economy and Oceaneering and Colfax will be boosted by renewed interest in the oil and gas industry. Tractor Supply should perform well as it continues it onslaught of store growth. Although all of these stocks are product based companies and out of the tech sector that Mandel usually finds great value in, they all have expected growth that makes them very intriguing investments.
