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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 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.
The company's reportable stock portfolio totaled $15.9 billion in value as of Dec. 31, 2012.
So what does Lone Pine Capital's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Facebook (NASDAQ: FB ) and Capital One Financial (NYSE: COF ) . Other new holdings of interest include Intuitive Surgical (NASDAQ: ISRG ) . Facebook is compelling to many, with its hundreds of millions of users and its top ranking in mobile app reach. But it’s not without risks, such as a seemingly rich valuation and concerns about the influential younger generation gravitating toward other social platforms. In addition, a new study casts doubt on the efficacy of social-media advertising.
Shares of Intuitive Surgical hit a 52-week low recently, partly on reports that robotic surgeries may not be as worthwhile as many think and news of an investigation into its systems’ safety. But with a recent P/E ratio of about 30, a forward P/E of 21, and an expected near-term growth rate of 18% (following an average growth rate of 34% over the past five years), many see it as attractively priced now.
Among holdings in which Lone Pine Capital increased its stake was priceline.com (NASDAQ: PCLN ) . Priceline has been experiencing strong growth internationally, and its financial statements offer lots to love, such as its steep and growing free cash flow and net margins near 27%. Its forward P/E ratio of just 15 is attractive, too, considering its sizable growth rate. The company has made a $1.8 billion offer for Kayak Software (UNKNOWN: KYAK.DL ) , and its hotel-booking business has been a very strong performer.
Lone Pine Capital reduced its stake in lots of companies, including Accretive Health (NASDAQOTH: ACHI ) , which has fallen by more than 57% over the past year, in part due to news that it’s delaying releasing its fourth-quarter and year-end earnings reports as it reevaluates its accounting habits. The company specializes in revenue cycle management services for the health-care industry. Right now, it’s heavily shorted, reflecting market skepticism about it.
Finally, Lone Pine Capital's biggest closed positions included Apple (NASDAQ: AAPL ) and Schlumberger (NYSE: SLB ) . Energy giant Schlumberger is in the business of helping companies find and extract gas and oil. It’s the second-largest fracking supplier and its technology and offerings may help frackers be kinder to the environment. It recently took a small hit on news that it’s experiencing pricing pressures and weakness in North American drilling activity. The company’s geographical diversification helps it there.
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. 13-F forms can be great places to find intriguing candidates for our portfolios.
Are stories of this demise greatly exaggerated?
While some investors are questioning Intuitive Surgical's future, Intuitive Surgical expert Karl Thiel believes a visible path to long-term growth persists. Will Intuitive capitalize, or be crushed by unforeseen pitfalls? His report highlights all of the key opportunities and risks facing the company -- and includes a full year of ongoing updates as key new hits -- so be sure to claim your copy by clicking here now.