Steve Mandel Lone Pine Capital Stephen Mandel
Stephen Mandel

 

Stephen Mandel: Background & bio

Tiger Cub Stephen Mandel, Jr. runs the $23 billion hedge fund firm, Lone Pine Capital, was named for a mythical Dartmouth College pine tree that survived an 1887 lighting strike.

Stephen Mandel  founded Lone Pine Capital in 1997. Previously, he was a Senior Managing Director and Consumer Analyst at Tiger Management Corporation from 1990 till 1997, Mass-Market Retailing Analyst at Goldman Sachs from 1984 till 1990, and Senior Consultant at Mars and Company from 1982 till 1984. Mr. Mandel was Equity Analyst at Goldman Sachs Group Inc., Research Division. He serves as Chairman of Connecticut Fairfield County. Mr. Mandel has been Chairman of Dartmouth College since June 2010 and serves as its Trustee. He serves as a Director of Teach For America, Inc. Mr. Mandel is a Trustee of the Children’s School in Stamford, Connecticut and Philips Exeter Academy. He served as a Director of Bertuccis Corp. since December 1997. Mr. Mandel served as a Director of Bertucci’s Restaurant Corp. since December 1997 until December 2013. Mr. Mandel graduated from Harvard Business School in 1982, Dartmouth College in 1978, and Phillips Academy in 1974.

After crushing the markets during 2012, Stephen Mandel earned a place on the list of the world’s highest paid hedge fund managers earning $350 million.

Stephen Mandel joined Tiger Management during 1990 where Julian Robertson took him under his wing. After seven years at Tiger, Stephen Mandel started Lone Pine, with Julian Robertson’s blessings.

Stephen Mandel: Investment philosophy

Stephen Mandel strategy involves favoring either stocks that compound value through organic earnings growth or companies that are “undergoing favorable management and strategic changes not yet realized in their valuations.” Mandel says that while this strategy is not currently in favor, the approach “has characterized our investing since our founding and we believe strongly in its long-term validity.” Mandel specifically points to Tesla Motors Inc (NASDAQ:TSLA) and Zillow Inc (NASDAQ:Z) as “Blue sky” stories -stocks with little earnings, but high valuations.

It’s not possible to pigeonhole Stephen Mandel’s style of investing. He is neither value nor growth. He uses his own strategy, seeking out good businesses run by good people, trading at attractive valuations — just like the strategy of his mentor, Julian Robertson.

Stephen Mandel does not hold many stocks for very long. 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.

Stephen Mandel’s success has been linked to his methodology of “bottom-up” investing. Focusing on the underlying business, Stephen Mandel believes in conducting a thorough fundamental analysis of the business to decipher and understand its practices, operations, and future growth. Unlike most managers, Mr. Mandel deftly moves in and out of positions relying on his strong judgments and quick decisions.

Stephen Mandel: Lone Pine

Lone Pine Capital LLC was founded in 1997 by Stephen Mandel and is based in Greenwich, Connecticut with satellite offices in London, Hong Kong and New York.

From Hedgefundletters.com:

Lone Pine Capital LLC is a privately owned hedge fund sponsor which invests in the public equity markets across the globe. From its initial, humble launch with $8 million, the fund has today established itself as a “mega fund” with $23 billion in assets under management and an estimated personal wealth of $1.5 billion for Stephen. Mandel. The fund has consistently beaten the S&P 500 index by over twenty percentage points since its inception.

…Lone Pine Capital is a classic long/short equity hedge fund employing fundamental analysis together with a bottom up stock picking approach to formulate its portfolio. However, its Mr. Mandel’s acumen and singular approach towards fundamental analysis — Seth Klarman once described him as a “fantastic analyst” — that separates Lone Pine Capital LLC from the generic pack.

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