With broader stock market indices nearing what many consider to be fully valued, next year’s best performing investors will likely be those that excel in the art of identifying value. We tracked and analyzed the moves of the world’s best billionaire investors. Over the past 15-years, there has been perhaps no one better at identifying value, than billionaire Stephen Mandel of Lone Pine Capital.
Stephen Mandel, a Dartmouth graduate and Harvard MBA, is a “Tiger Cub.” He worked for legendary billionaire Julian Robertson in the 1990s, before starting his own hedge fund in 1997.
His hedge fund, Lone Pine, has returned 30% annualized (before fees) since 1997. This compares to a 7.5% annualized return in the S&P 500 during the same time period. To put this performance in perspective, investing $20,000 at 30% annualized for 15-years, grows to more than $1 million.
Stephen Mandel has, of course, achieved these world-beating returns in one of the most volatile 15-year periods in stock market history – and environment dominated by bubbles and crises. Most impressively, he’s done it as a classic bottom-up stock picker, not from global macro trading. Currently Mandel’s hedge fund runs more than $20 billion in assets. This has made Mandel a rich man. According to Forbes Stephen Mandel is worth more than $2 billion.
He recently made a brilliant move in Tiffany’s, buying up more than 5% of the stock in the weeks prior to earnings. Tiffany’s reported better than expected earnings on improved margins resulting from lower gold and silver prices. And Mandel reaped a windfall in his TIF shares. This is the kind of fundamental catalyst-driven investment that Stephen Mandel looks for when he takes a large stake in a company’s stock.
Here’s a look at Stephen Mandel’s five biggest positions according to his most recent filing:
1) Baidu Inc. (BIDU) – Mandel’s biggest position is in BIDU. It represents almost 7% of his $20 billion portfolio. BIDU is a pure play on China.
2) Valeant Pharmaceuticals (VRTX) – Stephen Mandel has almost 6% of his portfolio in VRTX.
3) Michael Kors Holdings (KORS) – Stephen Mandel owns almost 8% of KORS. And if you are looking to buy Mandel on a dip, this is the stock. KORS is down more than 15% over the past six months. But many analysts are projecting a turnaround for this company.
4) Mastercard Incorporated (MA) – Mandel has almost 5% of his portfolio in Mastercard.
5) Microsoft (MSFT) – Stephen Mandel has 4% of his portfolio in Microsoft. Microsoft still looks cheap at 14 times next year’s earnings, plus it has a 2.6% dividend yield.