Steven Mandel formed Lone Pine Capital in 1997 after seven years as with Tiger Management where he was a managing director. Prior to founding LPC, Mr. Mandel was managing director and consumer analyst at Tiger Management Corporation (1990-1997), mass-market retailing analyst at Goldman, Sachs (1984-1990) and consultant at Mars and Company (1982-1984). Mr. Mandel graduated from Phillips Exeter Academy (1974), Dartmouth College (1978) and Harvard Business School (1982). At its largest Lone Pine had $9bn under management.

His theory of bottom up investment has rendered him many accomplishments. Lone Pine under the stewardship of Stephen Mandel has achieved many milestones. In 2004, it was named the hedge fund of the year by Alternative Investment News’ Second Annual Hedge Fund Industry Awards.

Lone Pine Capital is based in Greenwich, Connecticut. With Stephen Mandel steering the ship, it manages a total portfolio of $12.136 billion spread out in 52 stocks. 24% of its total stock is invested in five major companies. These include Citigroup, Schulumberger, Apple, Yum brands and Cognizant Technology.

Investment Philosophy

Today Mandel stands amongst the top ten earners in American Hedge Fund business. The secret to this success lies in his investment philosophy. This strategy basically employs research intensive method. Essentially, traditional equity value and growth hedge funds purchase stocks which they perceive to be undervalued and sell stocks which they perceive to be overvalued.

He mainly concentrates on long/short equity management. He does not believe in absorbing just the macroeconomic indicators in making his decisions. He goes further and expands his base and includes factors solely attributed to the company and its workings. Such an approach encompassing analysis of individual stocks can easily be regarded as a fundamental of Stephen Mandel’s approach towards portfolio management.

Stephen Mandel despite everything still boasts of beating S&P 500 by 20% each year for eleven steady years. His acumen lies in his quickness. He is not hesitant to make huge decisions quickly. He can be seen to move quickly in and out of positions as manifested by his latest buying in Citigroup and Schulumberger after a reduction in Apple which was his major buying in 2008.

Manager’s Bio

Stephen Mandel acquired AB from Dartmouth College in 1978. He derived the name of his firm from a road situated in Dartmouth. He later went on to acquire his MBA from Harvard Business School in 1982. He then served as an analyst and a consultant. His major breakthrough came about when he worked under the mentorship of Julian Robertson at Tiger Management Corporation. Julian Robertson is highly acclaimed for his approach towards the market. It is no doubt that the legendary Mr. Robertson possesses the honor of mentoring most of the major players of stock market today. These students have been referred to as tiger cubs by other analysts and undisputedly for all the right reasons. Mr. Robertson’s approach was to account for cyclical movements in the market and make major stock purchase decisions based on those cyclical movements. However, his cubs did not share his ideology in its entirety. They begged to differ and carved their own exclusive approaches. Stephen Mandel stands out in that regard. He followed the bottom up investment approach. Patterns of individual stocks were of graver importance to him than the macroeconomic indicators of the whole market. He studied each company and its market trends. He tried to understand the dynamics of each company and this very understanding was what he cashed in on later. He bought stocks in established companies and dealt with them at a micro level.

Stephen Mandel can rightly be termed as a self made businessman. Upon completion of his MBA he started his financial career as a consultant at Mars and Company in 1982. By 1984, he had sharpened his networking and proved his financial prowess enough to join at Goldman Sachs as an analyst. He spent six years at Goldman where he groped the market trends and gained deep insight into the financial sector. In 1990 he made an important career move and moved to Tiger Management. Working under Julian Robertson proved to be fruitful for him. The celebrated financial guru’s influence encouraged him to take a step further in his career and in 1997, Stephen Mandel took a leap forward and established Lone Pine Capital. He maintained a 25% return every year till 2008 before the crisis took over. He uses both long/short and long-only strategies to keep investors happy.

He is married with 3 children and currently is part of Dartmouth’s board of Trustees. He also sits on the board for Teach America. Alongside, he is involved in humanitarian activities and manages Lone Pine Foundation which is primarily dedicated to helping children with special concentration on families residing in New York City.

Mandel has been revered as a very quick player. He does not hold many stocks for very long. It is safe to assume that most of his trading is very hard to gauge on a trend curve due to his constant unpredictability. The most prominent example of this can be derived from his management of Apple shares. In 2006 he had 3 million Apple shares valued at $85 per share. He sold 1.5 million of these shares between April and June 2007 at $120 per share. Upon reaching $150 per share, he sold another quarter million shares. As soon as it hit $200 benchmark, Mandel reduced his shares significantly to 600,000 shares. However, when Apple shares went down to $140 in 2008, Mandel unexpectedly added a round of 2.3 million shares in March 2008. He sold them by June 2008. He abstained from Apple for a year till he purchased 3.1 million shares again in Q3 2009. It was worth $190 per share at that time. Again when the shares increased in value to $210, he reduced his holdings by 500,000. He sold another 300,000 by March 2010. By Q2 2010, he again followed his cycle and purchased 350,000 shares.

Mandel cycles are not easy to study. It is safe not to give too much importance to small details as it can cumber your decision. Mandel is an unpredictable and a fast trader. He seems to follow a formula for balance where his reduction is immediately matched by another buying. In order to understand his investment philosophy and success as a market player, his top investments must be reviewed to understand his mechanism of establishing balance. His top five investments are- Citigroup; Yum Brands Inc; Schulumberger; Apple; Cognizant Technologies.

Citigroup makes up 5.66% of Lone Pine Capital. Lone Pine further purchased a large stake in Citigroup worth $700 million in the recent quarter. It also initiated a $584 million position in Schulumberger. Schulumberger constitutes third largest holding of Lone Pine Capital, making up 4.82% of portfolio. He however, significantly reduced stocks of Apple, Yum Brands and Cognizant Technologies. Mandel currently has 15 million shares worth $700 million in Yum Brands Inc. It constitutes roughly 4.99% of Mandel’s portfolio. It has been reduced by approximately 14.5% quarter to quarter. Secondly, it also sold some Ashmore. After owning 6.21% of the company in January of 2009, Lone Pine has slowly reduced its stake to now under 3%. Ashmore recently agreed to buy 63% of Emerging Markets Management for around $96 million in cash and $29.9 million in new stock.

Mandel’s treatment with Apple’s share has been a ground for a lot of discussion. It constituted fourth largest holding in Lone Pine capital. However, in recent years, he significantly reduced it by 38.8%. During the same time, Cognizant’s net position was reduced by 25%. It currently holds more than 9 million shares with an aggregate worth of $600 million. Cognizant returned 15.6% beating SPY by 2.6% points.

Upon a recent survey it has been observed that his investments in Technology have taken a plunge by 8.2% alongside Telecommunications and consumer goods and services which experienced a reduction by roughly 3.5%. Moreover, the hedge fund also currently owns approximately 7.89 million American depositary shares.

Apart from the above mentioned five big holdings, Lone Pine had been trading in a number of other holdings which caught a lot of attention by other investors. These included Crown Castle Intl Corp, JP Morgan Chase, SPDR, Accenture Plc, Equinox Inc, Estee Lauder, Goodrich Corp and Polo Ralph Lauren. The figures quoted are as reported on Jan 2011. Analysts are of the opinion that his eleven top funds underperformed. However, their analysis is based on three months report which they themselves admit to not being very reliable as three months is not a good enough period to judge the performance of a hedge fund and generate predictions.

Crown Castle Intl Corp’s (CCI) holdings were valued at $540 million. Crown Castle lost 5.9% since the end of September, underperforming the market by a huge margin. Lone Pine had 11.7 million shares of JP Morgan Chase (JPM) valued at $446 million. Second Curve’s Tom Brown was recently very bullish about JP Morgan. JP Morgan returned 15.1% since the end of September. Lone Pine had $431 million exposure to SPR Gold Trust (GLD). Gold underperformed the market by 8.5 percentage points since September.

Lone Pine’s holdings of Accenture Plc (ACN) Ireland are worth $393 million. ACN has returned 19.3% since the end of September. Mandel had 3.3 million shares ($341 million) of Equinox Inc (EQIX) at the end of September. The stock lost 15.5% since then. Lone Pine had around $338 million worth of Estee Lauder (EL) stock at the end of September. The stock returned 33.7% since then. Lone Pine had nearly $300 million of worth Goodrich Corp (GR) stock. The stock returned 22.1% since the end of September. Mandel had 3.1 million shares of Polo Ralph Lauren (RL) and added more during the fourth quarter of 2010, increasing his ownership to 5% of the company. This stock also managed to beat the SPY by about 4.1 percentage points.