Steve Mandel’s Lone Pine Capital has a dozen short positions that are disclosed publicly in European equities. All shorts weighted on the basis of current market value make up a $650 million short portfolio. See all European short positions here.
In the U.K., all four of Lone Pine’s shorts are in the retail sector. The fund has short bets in Wm. Morrison Supermarkets plc (LON:MRW), Dixons Retail PLC (OTCMKTS:DSITY) (LON:DXNS) and Home Retail Group Plc (LON:HOME). The Tiger cub also has a short in WH Smith Plc (LON:SMWH) in London, a distributor of books and magazines in travel and high street sections. Other shorts of Lone Pine not mentioned below are in Neopost, Holmen and Electrolux.
Lone Pine Shorts in Wm. Morrison Supermarkets
Lone Pine has a 0.9 percent short in Wm. Morrison Supermarkets plc (LON:MRW) which is a $94 million position as of now. Wm. Morrsion is up 11 percent YTD. The only other hedge fund which thinks Wm. Morrison Supermarkets plc (LON:MRW)’s doom is close is Lansdowne Partners, as reported in a detailed post on Lansdowne’s $3 billion short portfolio.
The retail sector has been targeted by a large number of hedge funds, and companies like Ocado Group are the among the most shorted stocks in the U.K. and despite of high short interest, these bets have failed to deliver profits for the shortsellers as share prices touched new highs.
Jefferies recently reiterated their Buy rating on the stock but Bank of America analysts downgraded MRW from Buy to Neutral. Wm. Morrison Supermarkets plc (LON:MRW) is currently in talks with Ocado Group PLC (LON:OCDO) over a technology tie-up, however Morrison’s performance has been unaffected by these new developments so far. MRW is up 11 percent YTD.
Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is a famous short of Tiger cubs—Lone Pine has a 0.97 percent position in the smartphone maker, which amounts to a $130 million bet according to the current market value of the company. Nokia is one of Mandel’s profitable short bets—the stock has detracted for the last three months now, after experiencing a brief run of appreciation in January. Nokia has suffered through an overall reduction in sales, and a lukewarm reaction to Windows 8 also did not help the troubled Finnish company. The company released the Nokia Lumia 925 today which apparently did not excite anyone. NOK closed down 5 percent in Finland.
Air France – KLM
Air France – KLM (EPA:AF) is another short position of Mandel. The French airline has declined in the past few months but is up 4 percent YTD. Lone Pine is among the few who have bet on the fall of Air France. The airline’s losses widened in the first quarter to $823 million. The company has been trying to reduce costs and restructure itself but has been bogged down by the euro crisis. Lone Pine’s short is worth $22 million.
Lone Pine has a 0.66 percent short in Swedish Match AB (STO:SWMA), a tobacco company. As of now the short is worth $47 million. The fund disclosed the position in late April and the shares have gained 11.8 percent since then. Lone Pine missed out on timing the Swedish Match AB (STO:SWMA)’s short when it fell throughout March and late February. Mandel must be seeing some serious headwinds here as the short was declared just days before the company was due to announce Q1 profits. On Monday, Nordea Bank advised buying shares of Swedish Match and forecasted that the price war on snus, a moist powder tobacco product originated from a variant of dry snuff, would soon end. Last month, Nomura’s analysts also raised estimates for the cigar maker.
Ingenico SA (EPA:ING), another short bet of Lone Pine, has been repeatedly and actively targeted by shortsellers but it has consistently climbed up. Ingenico is a French provider of payment solutions, like over the web or through mobile. Ingenico SA (EPA:ING) faces tough competition from VeriFone Systems Inc (NYSE:PAY) and judging by the excess of short bets from US funds on Ingenico, it appears that the short thesis is based on its inability to acquire back its market share from competitors. Another Tiger cub is also shorting Ingenico, namely, Coatue Management. Carlson Capital, Cadian Capital and Wellington Asset Management also have a short position in the payment maker.
So far Lone Pine’s 2.4 percent short in Ingenico (worth $83 million) has not been profitable—shares have risen 10.7 percent since the position was disclosed in February.
Lone Pine has maintained a short in Gemalto NV (EPA:GTO) since November of last year. Gemalto makes microprocessor based devices and provides secure digital solutions. Gemalto NV (EPA:GTO) received a crucial security certification recently which cements its foray into government smart card security, and the stock closed up 2 percent today. For Lone Pine, the short in Gemalto has been profitable, and shares have declined 11 percent YTD. Lone Pine has a 0.98 percent short in the company that would be equal to $65 million.
Stora Enso OYJ (OTCMKTS:SEOAY) (HEL:STEAV) is a Finnish paper maker. The Finnish paper industry has been the target of several short bets, and other companies like UPM-Kymmene Corporation (OTCMKTS:UPMKY) (HEL:UPM1V) and Metsa Board Oyj (HEL:METSA) are also short positions of several investors. Lone Pine has a 0.92 percent short in Stora Enso OYJ (OTCMKTS:SEOAY) (HEL:STEAV), which is equal to $53 million. This is likely a sector driven bet, as most of the data has shifted online, so reliance on paper industry all over the world has reduced. Finnish paper is one of the pillars of the country’s economy, clearly under severe pressure these days. Stora Enso has shut down some of its plants in the past months.
Stora Enso OYJ (OTCMKTS:SEOAY) (HEL:STEAV) is up 10 percent YTD.
Further Reading- Jim Chanos’ $360M European Short Portfolio