Lone Pine Capital founder Steve Mandel (Trades, Portfolio) disclosed his fourth-quarter portfolio on Feb. 14, listing eight new positions.
A former “Tiger Cub” of Julian Robertson (Trades, Portfolio)’s Tiger Management, Mandel founded his Greenwich, Connecticut-based hedge fund in 1997. Utilizing a long-short investment strategy, the firm picks stocks using bottom-up, fundamental analysis. Lone Pine does not typically hold positions for very long.
Mandel announced last September he is stepping down from managing the fund in January 2019.
While Mandel started new positions in several stocks he previously owned, four brand new stocks to his portfolio are IQVIA Holdings Inc. (IQV, Financial), BlackRock Inc. (BLK, Financial), Agilent Technologies Inc. (A, Financial) and Sea Ltd. (SE, Financial).
IQVIA Holdings
In his largest buy of the quarter, Mandel purchased 9.86 million shares of IQVIA for an average price of $101.80 per share, giving it 5.04% portfolio space.
The Durham, North Carolina-based medical diagnostics and research company, which was previously known as Quintiles IMS Holdings Inc., has a market cap of $20.59 billion; its shares were trading around $98.75 on Friday with a price-earnings (P/E) ratio of 16.84, a price-book (P/B) ratio of 2.53 and a price-sales (P/S) ratio of 2.25.
The Peter Lynch chart below shows the stock is trading higher than its fair value, suggesting it is overpriced.
As the company has issued new debt over the past several years, IQVIA’s financial strength was rated 4 out of 10 by GuruFocus. In addition, its Altman Z-Score of 1.45 indicates the company is at risk of going bankrupt. The company’s profitability and growth was rated 6 out of 10 as it has a strong Piotroski F-Score of 6 and its operating margin outperforms 62% of competitors, despite having declined over the past five years.
With his purchase, Mandel became the company’s largest guru shareholder with 4.74% of outstanding shares. During the quarter, a slew of other guru investors established positions in the stock as well, including Larry Robbins (Trades, Portfolio), the Vanguard Health Care Fund (Trades, Portfolio), Jana Partners (Trades, Portfolio), Jim Simons (Trades, Portfolio), Glenn Greenberg (Trades, Portfolio) and Robertson, among others.
BlackRock
Mandel invested in 1.1 million shares of BlackRock for an average price of $485.85 per share, expanding the portfolio 2.96%.
The New York City-based company, which is the largest asset manager in the world, has a market cap of $87.83 billion; its shares were trading around $544.18 on Friday with a price-earnings ratio of 17.96, a price-book ratio of 2.92 and a price-sales ratio of 7.52.
According to the Peter Lynch chart below, the stock is overpriced as it is trading above its fair value.
GuruFocus rated BlackRock’s financial strength 4 out of 10 as its interest coverage ratio and Altman Z-Score of 0.54 indicate the company is under financial stress. Its profitability and growth, however, is a strong 8 of 10 as its operating margins are expanding and it has a strong Piotroski F-Score of 6 and business predictability rating of four stars.
Daniel Loeb (Trades, Portfolio) is the company’s largest shareholder among the gurus with 0.96% of outstanding shares. Other gurus who own the stock include Pioneer Investments (Trades, Portfolio), Manning & Napier Advisors Inc., Tom Gayner (Trades, Portfolio), Ken Fisher (Trades, Portfolio) and Simons.
Agilent Technologies
The guru bought 3.6 million shares of Agilent Technologies for an average price of $67.42 per share, impacting the portfolio by 1.26%.
The Santa Clara, California-based company, which manufactures analytical laboratory instruments, has a market cap of $22.7 billion; its shares were trading around $70.28 on Friday with a price-earnings ratio of 119.12, a price-book ratio of 5.02 and a price-sales ratio of 4.96.
Based on the Peter Lynch chart below, the stock appears to be overpriced as it is trading higher than its fair value.
Agilent’s financial strength was rated 7 out of 10 by GuruFocus. Despite the fact the company has been issuing new debt over the past three years, the debt level is still manageable. In addition, its Altman Z-Score indicates its financial situation is stable. As the company’s operating margin has been expanding and it has a high Piotroski F-Score of 7, its profitability and growth was rated 6 of 10.
With 1.49% of outstanding shares, PRIMECAP Management (Trades, Portfolio) is the company’s largest guru shareholder. Robertson, Pioneer Investments (Trades, Portfolio), Leucadia National (Trades, Portfolio) and the Eaton Vance Worldwide Health Sciences Fund (Trades, Portfolio) also established positions in the stock during the quarter. Joel Greenblatt (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), Simons, Paul Tudor Jones (Trades, Portfolio), Ron Baron (Trades, Portfolio) and several others are also shareholders.
Sea Ltd.
Mandel invested in 3.22 million shares of Sea Ltd. for an average price of $13.71 per share, giving it 0.22% portfolio space.
The Singapore-based digital entertainment, e-commerce and financial services company, which went public in October, has a market cap of $3.95 billion; its shares were trading around $12.08 on Friday with a price-earnings ratio of 37.75 and a price-sales ratio of 11.50.
The Peter Lynch chart below shows the stock is overpriced as it is trading above its fair value.
As the company’s Altman Z-Score of 0.31 suggests it is under financial stress, Sea’s financial strength was rated 4 out of 10 by GuruFocus. Its profitability and growth was rated 2 of 10.
Mandel has the largest position in the stock with 0.99% of outstanding shares. Frank Sands (Trades, Portfolio) and Robertson are also shareholders.
Other trades
Mandel also established positions in Amazon.com Inc. (AMZN, Financial), CSX Corp. (CSX, Financial), Alphabet Inc. (GOOG, Financial) and TransDigm Group Inc. (TDG, Financial), which he had previously sold out of.
His current portfolio of 31 holdings is largely composed of stocks in the technology and consumer cyclical sectors. According to Bloomberg, as of last September, Mandel’s main fund has returned an annualized 19.5% since its inception.
Disclosure: No positions.
