Here's What This Huge Long-Term Winner Has Been Buying

Every quarter, many money managers have to disclose what they've bought and sold via 13F filings. Their latest moves can shine a bright light on smart stock picks.

Today, let's look at Lone Pine Capital, founded by Steve Mandel in 1997. Prior to that, Mandel was a managing director at Tiger Management. Lone Pine is one of the biggest hedge fund companies, and it has reportedly beat the S&P 500 for 11 years in a row. Like many value investors, Mandel is known to dig deep into companies, aiming to buy undervalued ones.

Lone Pine Capital's stock portfolio totaled $16.4 billion in value as of March 31, 2012. The fund's top three holdings, representing 15.5% of total assets, are El Paso, Google, and priceline.com.

Interesting developments
So what does Lone Pine Capital's latest quarterly 13F filing tell us? Here are a few interesting details.

New holdings include Ulta Salon (Nasdaq: ULTA  ) , which has been on a tear, averaging about 94% annual growth over the past two years. It focuses on beauty salons, cosmetics, and fragrances, among other things, and is the nation's largest beauty retailer. Its earnings have grown by more than 30% on average over the past five years, and it has bold expansion plans. The company is also finding success with new high-margin home tools, such as ones to treat acne or remove hair, and in adding Lancome boutiques within its salons.

Among holdings in which Lone Pine increased its stake was Green Mountain Coffee Roasters (Nasdaq: GMCR  ) . The stock has averaged 28% annual gains over the past decade, but it's plunged some 70% over the past year. Thus, some see it as bargain-priced right now, while others wring their hands over weaker-than-expected recent sales and slowing consumption of coffee pods after consumers have owned their Keurig machines for a while.

Lone Pine reduced its stake in lots of companies, including Las Vegas Sands (NYSE: LVS  ) . The company's Las-Vegas-based casinos have struggled as the city's economy has floundered, but it's well positioned in Macau and elsewhere in Asia, where gambling is generating a lot of revenue. It's also expanding into Europe and elsewhere. Still, bears worry about its hefty debt load, and whether China's slowing economy will also put a damper on gambling.

Finally, Lone Pine unloaded several companies, such as Baidu (Nasdaq: BIDU  ) and Arco Dorados Holdings (NYSE: ARCO  ) . Baidu is also vulnerable to a slowing Chinese economy, as it's the nation's biggest search engine. But it has recently struck a deal to have its search engine embedded in China's iPads and iPhones, which is a rather big deal. And it's adding advertisements to its social forums, as well, which should boost its top line.

Arco Dorados is the largest franchiser of McDonald's restaurants in the world and is focused on Latin America. It has been growing briskly, and adding scores of restaurants to its fold each year. But its stock recently took a big hit when the company posted some disappointing earnings, pointing to rising foreign-exchange losses and tax costs, among other causes. Some see the stock as simply more of a bargain now, though.

We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing, and 13F forms can be great places to find intriguing candidates for our portfolios.

If the slowdown in China has you worried, know that you don't have to leave home to get great portfolio results. Check out our special free report, "3 American Companies Set to Dominate the World," to see which companies our analysts are very bullish about.

Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of McDonald's and Google, but she holds no other position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool owns shares of Baidu, priceline.com, Google, and Arcos Dorados. Motley Fool newsletter services have recommended buying shares of Green Mountain Coffee Roasters, Ulta Salon, Cosmetics & Fragrance, Baidu, priceline.com, Google, and McDonald's, as well as creating a lurking gator position in Green Mountain Coffee Roasters. The Motley Fool has a disclosure policy.

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  • Report this Comment On June 09, 2012, at 11:15 AM, cp757 wrote:

    Selena this is a good story but I dont think the reader gets the whole idea about how these companys make money.This is what your story does not say. Steve Mandel initiated holdings in Las Vegas Sands. His purchase prices were between $37.33 and $49.21, with an estimated average price of $45.13. The impact to his portfolio due to this purchase was 2.3%. His holdings were 7,366,136 shares as of 09/30/2011. I follow him and he has made a lot of money selling LVS between 55 and 60 ,on swing trades with LVS. I am sure that on the next report it will show that Lone Pine loaded up on LVS at 43 for the next run to 65. People will use this information in all sorts of ways but I want to make money by knowing " The rest of the story"

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