Lone Pine Capital leader Steve Mandel (Trades, Portfolio) disclosed in his third-quarter portfolio, which was released Nov. 14, that he established three new positions.
As a protégé “tiger cub” of Julian Robertson (Trades, Portfolio), the guru’s Greenwich, Connecticut-based hedge fund picks stocks using a long-short strategy that focuses on bottom-up, fundamental analysis.
Based on this strategy, Mandel purchased holdings of First Data Corp. (FDC, Financial), Union Pacific Corp. (UNP, Financial) and Nio Inc. (NIO, Financial) during the quarter.
First Data
The guru invested in 21.9 million shares of First Data for an average price of $24.11 per share, allocating 2.76% of the equity portfolio to the stake.
The Atlanta-based financial services company has a $17.78 billion market cap; its shares were trading around $18.98 on Thursday with a price-earnings ratio of 9.98, a price-book ratio of 4.36 and a price-sales ratio of 1.78.
The Peter Lynch chart shows the stock is trading below its fair value, suggesting it is undervalued.
Weighed down by poor interest coverage and declining revenue per share, GuruFocus rated First Data’s financial strength 4 out of 10. In addition, the Altman Z-Score of 0.38 indicates the company is in danger of going bankrupt. The company’s profitability and growth scored a 7 out of 10 rating, which was driven by an expanding operating margin, a high Piotroski F-Score of 7, which implies healthy operations, and a business predictability rank of one out of five stars. According to GuruFocus, companies with this rank typically see their stock prices gain an average of 1.1% per year.
Of the gurus invested in First Data, Larry Robbins (Trades, Portfolio) has the largest holding with 2.35% of outstanding shares. Steven Cohen (Trades, Portfolio), Leon Cooperman (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio), NWQ Managers (Trades, Portfolio), Jana Partners (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Diamond Hill Capital (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio) are also shareholders.
Union Pacific
Mandel picked up 3.2 million shares of Union Pacific for an average price of $150.54 per share, dedicating 2.70% of the equity portfolio to the position. The guru previously sold out of the stock in the first quarter of 2011.
The railroad company, which is headquartered in Omaha, Nebraska, has a market cap of $111.1 billion; its shares were trading around $149.99 on Thursday with a price-earnings ratio of 10.11, a price-book ratio of 5.39 and a price-sales ratio of 5.13.
According to the Peter Lynch chart, the stock is undervalued.
Union Pacific’s financial strength was rated 5 out of 10 by GuruFocus. Although the company has issued roughly $9 billion in new long-term debt over the last three years, it is at a manageable level as a result of adequate interest coverage. In addition, the Altman Z-Score indicates the company is in good financial standing. Supported by an expanding operating margin, good returns and a moderate Piotroski F-Score of 6, the company’s profitability and growth scored an 8 out of 10 rating. It also has a three-star business predictability rank, which, according to GuruFocus, means it has consistent earnings and revenue growth and it sees its stock price gain an average of 8.2% per year.
With 1.36% of outstanding shares, Dodge & Cox is the company’s largest guru shareholder. Several other gurus have positions in the stock, including First Eagle Investment (Trades, Portfolio), PRIMECAP Management (Trades, Portfolio), Pioneer, Cohen, Tweedy Browne (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Tom Gayner (Trades, Portfolio) and the Wintergreen Fund (Trades, Portfolio).
Nio
The investor purchased a 3.7 million-share stake in Nio for average price of $8.24 per share, giving the holding 0.09% space in the equity portfolio.
The Chinese electric vehicle manufacturer, which went public in September, has an $8.33 billion market cap; its shares were trading around $8.03 on Thursday with a price-book ratio of 10.98.
The price chart shows the stock has climbed approximately 23% since its debut on the New York Stock Exchange.
GuruFocus rated Nio’s financial strength 5 out of 10 and its profitability and growth 2 out of 10.
Mandel is the company’s largest guru shareholder with 0.36% of outstanding shares. Jones also owns the stock.
Additional trades
During the quarter, Mandel also expanded his holdings of Alibaba Group Holding Ltd. (BABA, Financial), Alphabet Inc. (GOOG, Financial), Wynn Resorts Ltd. (WYNN, Financial), Adobe Inc. (ADBE, Financial), Canadian Pacific Railway Ltd. (CP, Financial), Electronic Arts Inc. (EA, Financial) and Activision Blizzard Inc. (ATVI, Financial), among others.
The guru’s $19.44 billion equity portfolio, which is composed of 25 stocks, is largely invested in the technology sector with a weight of 42.83%.
Disclosure: No positions.
Read more here:
