Why These Billionaire Mandel Picks Deserve Your Attention

Billionaire Stephen Mandel is the founder of one of the world’s largest hedge funds in the world – Lone Pine Capital. This fund had a total long 13F portfolio value of approximately $22 billion as per the latest filing with information technology being the biggest focus sector. Stephen Mandel is a “Tiger Cub” having started Lone Pine Capital in 1997 and has a stellar track record of significantly outperforming the broader markets. His fund bought 11 new stocks during the third quarter while completely selling out 9 stocks. Unlike other large hedge funds, Stephen Mandel maintains a fairly concentrated portfolio with around 40 holdings and the top 10 stocks accounting for 44.7% of the total portfolio value. Following Stephen’s stock moves can be extremely rewarding for investors given his market beating performance over the years.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

Lone Pine Capital reduced its stake in athletic apparel maker Lululemon Athletica (NASDAQ:LULU) to 1.5% of the portfolio value down from 2.5% during the second quarter. Stephen Mandel was the biggest hedge fund seller of this stock during the third quarter as it pared its holding to $340 million. This still left Lone Pine Capital as one of the biggest owners of the company with a more than 4% equity stake.  Israel Englander’s Millennium Management and Janus Capital were the other large hedge funds which sold a substantial number of Lululemon Athletica (NASDAQ:LULU) shares. Lululemon recently reported very good quarterly results with revenues increasing by 13% year over year and EPS rising to 50 cents per share, up from just 38 cents in the year ago quarter. The company also announced a $100 million buyback authorization. Analysts are in general bullish on the stock with half of the 32 analysts covering the stock rating Lululemon Athletica (NASDAQ:LULU) as a buy. At the end of the third quarter the number of funds that we track owning Lululemon Athletica (NASDAQ:LULU) declined slightly to 26 from 28 in the quarter earlier.

Click next to see more of Mandel’s picks.

Align Technology, Inc.(NASDAQ:ALGN) is a medical technology company that has soared by 49% over the last one year and trades near its all-time high price of $99. Lone Pine Capital was the biggest fund buyer of this stock during the third quarter, initiating a new position by buying $228 million worth of shares (as of the end of September). Top ranked quant fund Renaissance Technologies was also a big buyer of Align Technology, Inc. (NASDAQ:ALGN), increasing its holdings by 13% to $88.5 million in the quarter ending September. While the stock may not look cheap with a forward earnings multiple of 33 and a P/B multiple of 8, the next 5 year average analyst growth estimate of 23% annually justifies the valuation for many bulls. 37 top funds had a bullish position in Align Technology, Inc. (NASDAQ:ALGN) at the end of the third quarter, up 11 funds from the previous quarter.

Lone Pine Capital slightly increased its holdings of telecom infrastructure provider Commscope Holding Company Inc. (NASDAQ:COMM) by 300,000 shares at the end of the third quarter and had a total holding of $114 million at the end of Q3. Lee Ainslie’s Maverick Capital, Renaissance Technologies and Rivulet Capital were some of the other large hedge fund buyers of Commscope Holding Company Inc (NASDAQ:COMM) during this time period. Currently 6.81 million shares have been shorted by market participants, down from 8 million in the prior time period. 13 analysts have rated Commscope Holding Company Inc (NASDAQ:COMM) as a buy while no analyst rates it a sell. The stock price has increased by an impressive 33% over the last one year and even a more impressive 144% over the past 5 years. At the end of September, 52 funds from our database held shares worth $2.88 billion of this stock, accounting for 49.3% of the company’s float at the month end.

Cheniere Energy, Inc. (NYSEMKT:LNG) is Lone Pine Capital’s largest energy holding with a value of $468 million (As of the end of September). Carl Icahn is the biggest owner and proponent of Cheniere Energy, Inc. (NYSEMKT:LNG) with a position value of $1.4 billion at the end of Q3. Analysts have an average target price of $51.5 which implies a 25% upside from its current price level. Cheniere Energy, Inc. (NYSEMKT:LNG) became the first company to export LNG from the lower 48 after it opened its LNG terminal at Sabine Pass earlier this year. The company has plans to build seven more LNG trains to supply natural gas to buyers in Asia under long term contracts. 45 funds from our system held 51% of the company’s outstanding shares as of September 30.

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