Talk about a seamless transition.
Lone Pine Capital’s two main funds easily beat the major market indices in 2019 after posting strong returns in the fourth quarter, according to a person with knowledge of the matter. It was the first year founder Stephen Mandel, Jr. stopped running the portfolios on a day-to-day basis.
Lone Cypress, the Tiger Cub’s long-short fund, finished 2019 up 36 percent after gaining 22 percent through the third quarter, according to the person. Lone Cascade, the long-only fund, was up 37 percent for the year, the person said, including a 20 percent gain through September.
By comparison, the S&P 500 surged 8.5 percent in the fourth quarter, finishing the year up 28.9 percent. Lone Pine’s assets under management, meanwhile, rose nearly 33 percent to $24 billion at the end of December.
Lone Pine declined to comment.
The firm’s funds are now run on a day-to-day basis by David Craver, Mala Gaonkar, and Kelly Granat. At the beginning of 2019, Lone Pine consolidated its three long-short funds into one bigger fund, Lone Cypress.
Mandel has not exactly disappeared from the scene. He still spends roughly the same amount of time in the office as he had previously, according to the person.
Lone Pine lost some money last year on its shorts, the person said, but not as much as some other funds that — not surprisingly — took a beating on their negative bets in a surging global stock market. Lone Pine also benefited from some leverage on its longs, the person said.
U.S. domiciled companies represent roughly 65 percent of the firm’s assets, according to the person.
Of course, the quarterly 13F filings only include U.S. listed long positions. There is no way to know which foreign-listed stocks Lone Pine holds.
This said, quarterly filings can be helpful in discerning where some of the biggest gains came from in the U.S.
At the end of the third quarter, Lone Pine held 38 individual common stocks in its $17 billion U.S. long stock market portfolio, according to the latest quarterly disclosure form. The five largest positions accounted for nearly 30 percent of the assets, while the top 10 positions represented nearly 50 percent of assets.
Most of the largest long holdings are in technology, consumer internet companies or consumer electronics.
Netflix, the ninth-largest long, is the only position among the largest holdings that was newly established in 2019. Long Pine bought the stock in the third quarter. In the final three months of the year, shares of the streaming giant surged 21 percent.
Lone Pine boosted its stakes in each of its three largest longs in the third quarter.
The firm’s largest U.S. position entering the fourth quarter was Alibaba Group Holding, a top-five holding all year. The stock surged nearly 55 percent in 2019.
Software giant Adobe rose about 46 percent last year. The company was Lone Pine’s largest long in the first half of the year and the fourth-largest at the end of September.
Microsoft Corp., a top-five position all year, surged about 55 percent in 2019.
E-commerce giant Amazon.com, the hedge fund firm’s second-largest long at the end of the third quarter, rose 23 percent last year.
The sole, non-tech company among Lone Pine’s top-five holdings was UnitedHealth Group. The health-care giant’s stock rose 18 percent in 2019.
