Lone Pine Capital, the hedge fund founded by Steve Mandel (Trades, Portfolio) in 1997, disclosed its first-quarter portfolio earlier this week.
The Greenwich, Connecticut-based firm picks stocks using a long-short strategy that focuses on bottom-up, fundamental analysis. Combining growth and value strategies, Lone Pine, whose founder was a former “tiger cub” of the late Julian Robertson, is known to not hold positions for very long.
Keeping these considerations in mind, the firm’s 13F filing showed it entered two new positions during the three months ended March 31, sold out of three stocks and added to or trimmed a slew of other existing investments. Among the most notable trades for the quarter were a new stake in KKR & Co. Inc. (KKR, Financial), an increased bet on Salesforce Inc. (CRM, Financial), reductions in the Amazon.com Inc. (AMZN, Financial) and Microsoft Corp. (MSFT, Financial) holdings and the divestment of Thermo Fisher Scientific Inc. (TMO, Financial).
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
KKR
The firm invested in 6.56 million shares of KKR (KKR, Financial), allocating 3.19% of the equity portfolio to the stake. The stock traded for an average price of $53.66 per share during the quarter.
The New York-based alternative asset manager has a $42.23 billion market cap; its shares were trading around $48.94on Wednesday with a price-book ratio of 2.27 and a price-sales ratio of 5.33.
The GF Value Line suggests the stock is significantly overvalued currently based on its historical ratios, past financial performance and analysts’ future earnings projections.
At 68 out of 100, the GF Score indicates the company has poor performance potential. While it received high ratings for profitability and momentum, growth was more moderate and the financial strength and value ranks were low.
Of the gurus invested in KKR, ValueAct Capital (Trades, Portfolio) has the largest stake with 2.38% of its outstanding shares. Chuck Akre (Trades, Portfolio)’s firm, Diamond Hill Capital (Trades, Portfolio), Bill Nygren (Trades, Portfolio) and Tom Gayner (Trades, Portfolio) also have sizeable holdings.
Salesforce
Lone Pine increased its Salesforce (CRM, Financial) stake by 270.73%, picking up 1.48 million shares. The transaction impacted the equity portfolio by 2.75%. Shares traded for an average price of $168.91 each during the quarter.
The firm now holds a total of 2.03 million shares, which occupy 3.76% of the equity portfolio. GuruFocus estimates it has gained 23.56% on the investment so far.
The tech company headquartered in San Francisco, which provides customer relationship management software and applications that are focused on sales, service and analytics, has a market cap of $202.86 billion; its shares were trading around $207.21 on Wednesday with a price-earnings ratio of 986.71, a price-book ratio of 3.58 and a price-sales ratio of 6.58.
According to the GF Value Line, the stock is significantly undervalued currently.
The GF Score of 92 suggests the company has high outperformance potential, driven by solid ranks for four of the criteria and a more moderate financial strength rating.
With a 1.40% stake, Ken Fisher (Trades, Portfolio) is the company’s largest guru shareholder. Other top guru investors of Salesforce include ValueAct, Al Gore (Trades, Portfolio)’s Generation Investment, Nygren, First Eagle Investment (Trades, Portfolio), the Harbor Capital Appreciation Fund (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and Steven Cohen (Trades, Portfolio).
Amazon
Mandel’s firm curbed its Amazon (AMZN, Financial) stake by 31.50%, selling 3.03 million shares. The transaction had an impact of -2.43% on the equity portfolio. During the quarter, the stock traded for an average per-share price of $96.61.
Lone Pine now holds 6.61 million shares, which represent 6.32% of the equity portfolio as the fifth-largest holding. GuruFocus data shows it has gained 25.72% on the investment to date.
The Seattle-based e-commerce company has a $1.19 trillion market cap; its shares were trading around $115.59 on Wednesday with a price-earnings ratio of 275.21, a price-book ratio of 7.68 and a price-sales ratio of 2.27.
Based on the GF Value Line, the stock appears to be significantly undervalued currently.
The GF Score of 93 implies the company high outperformance potential on the back of solid ratings for profitability, growth, GF Value and momentum as well as a more moderate financial strength rank.
Fisher has the largest stake in Amazon with 0.40% of its outstanding shares. The stock is also being held by Baillie Gifford (Trades, Portfolio), Dodge & Cox, Frank Sands (Trades, Portfolio), Gore’s firm, Harbor Capital, Warren Buffett (Trades, Portfolio) and many others.
Microsoft
With an impact of -1.87% on the equity portfolio, the firm reduced its Microsoft (MSFT, Financial) stake by 23.35%, or 816,043 shares. The stock traded for an average price of $255.08 per share during the quarter.
Lone Pine now holds 2.68 million shares, accounting for its second-largest holding with a weight of 7.15%. GuruFocus found the firm has gained 54.88% on the long-held investment.
The software company headquartered in Redmond, Washington, which is known for its Windows operating system and Office suite of products, has a market cap of $2.33 trillion; its shares traded around $313.60 on Wednesday with a price-earnings ratio of 33.98, a price-book ratio of 11.98 and a price-sales ratio of 11.27.
The GF Value Line suggests the stock is fairly valued currently.
The GF Score of 97 means the company has high outperformance potential based on strong ratings for four of the criteria and a more moderate value rank.
Holding a 0.53% stake, Bill Gates (Trades, Portfolio)’ foundation trust is Microsoft’s largest guru shareholder. Other top guru investors include Fisher, Dodge & Cox, PRIMECAP Management (Trades, Portfolio), Chase Coleman (Trades, Portfolio), Baillie Gifford (Trades, Portfolio), Harbor Capital and Gore’s firm.
Thermo Fisher Scientific
Impacting the equity portfolio by -3.09%, Lone Pine sold its 587,696 remaining shares of Thermo Fisher Scientific (TMO, Financial). During the quarter, shares traded for an average price of $563.62 each.
GuruFocus says the firm gained an estimated 5.40% on the investment over its lifetime.
The Waltham, Massachusetts-based company, which provides medical diagnostics and research solutions, has a $195.43 billion market cap; its shares were trading around $506.66 on Wednesday with a price-earnings ratio of 33.03, a price-book ratio of 4.62 and a price-sales ratio of 4.52.
According to the GF Value Line, the stock is modestly undervalued currently.
Supported by solid ratings for four of the criteria and a more moderate financial strength rank, the GF Score of 95 indicates the company has high outperformance potential.
Primecap is the company’s largest guru shareholder with a 0.92% stake. Thermo Fisher is also being held by Fisher, the Vanguard Health Care Fund (Trades, Portfolio), Gore’s firm, Baillie Gifford (Trades, Portfolio) and a number of other gurus.
Additional trades and portfolio composition
During the quarter, Lone Pine also established a new position in Bill Holdings Inc. (BILL, Financial), exited First Citizens BancShares Inc. (FCNCA, Financial), reduced its holdings of Taiwan Semiconductor Manufacturing Co. Ltd. (TSM, Financial) and Visa Inc. (V, Financial) and added to its ASML Holding NV (ASML, Financial) investment.
Nearly 40% of the firm’s $10.80 billion equity portfolio, which is composed of 29 stocks, is invested in the technology sector, followed by a smaller holding in the consumer cyclical space.
