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Billionaire Stephen Mandel’s Top 10 Stock Picks

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·9 min read
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In this article, we will take a look at billionaire Stephen Mandel's top 10 stock picks. You can skip our detailed analysis of Mandel's history, investment philosophy, and hedge fund performance, and go directly to Billionaire Stephen Mandel's Top 5 Stock Picks.

Billionaire investor, hedge fund manager and former Tiger Cub Stephen Mandel is the founder and managing director of the Connecticut-based investment management firm, Lone Pine Capital. After earning his B.A from Dartmouth College and his M.B.A from Harvard University, Stephen Mandel began his career as a senior consultant at Mars and Company. He later served as a mass-market retail analyst at The Goldman Sachs Group, until eventually joining Tiger Management in 1990, where he served as senior managing director and consumer analyst under the tutelage of the legendary Julian Robertson. In 1997, he left Tiger Management and founded his own hedge fund, Lone Pine Capital.

Lone Pine Capital, as an investment management fund, oversees more than $31.6 billion in its portfolio. According to the most recent 13F filings, Lone Pine Capital's portfolio branches out into 8 principal sectors, with the Technology sector dominating, making up 44.9% of the fund’s total portfolio value.

Some of the top stocks present in the investment portfolio of Lone Pine Capital at the end of the second quarter of 2021 include Facebook, Inc. (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT) and Square, Inc. (NYSE:SQ), among others discussed in detail below.

Billionaire Stephen Mandel's Top 10 Stock Picks
Billionaire Stephen Mandel's Top 10 Stock Picks

Stephen Mandel of Lone Pine Capital

Our Methodology

Let us now look towards billionaire Stephen Mandel's top 10 stock picks. We used Lone Pine Capital's 13F portfolio for the second quarter for this analysis.

Why should we pay attention to Stephen Mandel's stock picks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Billionaire Stephen Mandel's Top 10 Stock Picks

10. DoorDash, Inc. (NYSE:DASH)

Lone Pine Capital's Stake Value: $1.33 billion

Percentage of Lone Pine Capital's 13F Portfolio: 4.2%

Number of Hedge Fund Holders: 45

DoorDash, Inc. (NYSE:DASH) is an online food ordering and food delivery company based in San Francisco, U.S, and is considered the largest food delivery company in the United States.

Stephen Mandel's Lone Pine Capital currently owns 7.46 million shares in DoorDash, Inc. (NYSE:DASH), amounting to $1.33 billion in worth and accounting for 4.2% of the fund’s portfolio. In Q2 2021, 45 hedge funds held stakes in DoorDash, Inc. (NYSE:DASH), compared with 38 in the previous quarter.

On October 18, JMP Securities analyst Andrew Boone raised his price target on DoorDash, Inc. (NYSE:DASH) to $230 from $210, and kept an Outperform rating on the shares of the company.

9. ServiceNow, Inc. (NYSE:NOW)

Lone Pine Capital's Stake Value: $1.35 billion

Percentage of Lone Pine Capital's 13F Portfolio: 4.28%

Number of Hedge Fund Holders: 91

ServiceNow, Inc. (NYSE:NOW) is a software company that develops a cloud computing platform for companies to manage their digital workflow and operations.

On October 22, Oppenheimer analyst Ray McDonough raised the price target on ServiceNow, Inc. (NYSE:NOW) to $775 from $700, and kept an Outperform rating on the company's shares.

As of Q2 2021, Stephen Mandel owns 2.46 million shares of ServiceNow, Inc. (NYSE:NOW), amounting to more than $1.35 billion in worth and account for 4.28% of the fund's investment portfolio. Of the 873 hedge funds being tracked by Insider Monkey, 91 held stakes in the company at the end of the June quarter.

Just like Facebook, Inc. (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT) and Square, Inc. (NYSE:SQ), ServiceNow, Inc. (NYSE:NOW) is one of Lone Pine Capital's top stocks.

In its Q1 2021 investor letter, Palm Capital, an asset management firm, highlighted a few stocks and ServiceNow, Inc. (NYSE:NOW) was one of them. Here is what the fund said:

“ServiceNow provides software solutions to structure and automate various task and processes for large businesses. The company began in 2004 with a solution to help businesses manage the IT services they offer employees and customers. Unlike the existing solutions in the market, ServiceNow’s offering was built using modern architecture that was flexible, modular, and user-friendly. And it left the incumbents – large companies such as BMC, IBM and MicroFocus – playing catch up.

As the company grew to dominate this market, it saw the opportunity to expand its offering to include the broader task of IT Operations Management – or the monitoring and control of an entire business’s IT infrastructure. And over time its success in improving productivity and user experience in IT resulted in customers asking the company to expand its offering into other business workflows including HR Management and Customer Services – which it has since done.

All ServiceNow’s applications (including those built by customers and third parties) are built on its ‘Now’ platform. This allows the company and its customers to innovate and deploy new solutions quickly. And it helps ServiceNow gather a large amount of data to gain insights into and use machine learning to build solutions to meet customer needs in other areas. Crucially, this platform can interface with other SaaS and legacy software services used by its customers. Not only does this allow an IT department to manage all the myriad software services used by a business from a single point of control, it also reduces the operational disruption risk for those transitioning from legacy software systems to the cloud.

Aside from the ease of use of ServiceNow’s offerings, the other factor driving its growth is that its ‘land and expand’ strategy starts in the IT department of customers – the very department whose task it is to recommend other software solutions for businesses. It is therefore no surprise that more than 75% of ServiceNow’s customers use more than one of its products and 80% of its new business is from existing clients.

The company now serves…”[read the entire letter here]

8. Square, Inc. (NYSE:SQ)

Lone Pine Capital's Stake Value: $1.39 billion

Percentage of Lone Pine Capital's 13F Portfolio: 4.4%

Number of Hedge Fund Holders: 94

Square, Inc. (NYSE:SQ) provides payment processing solutions to different enterprises.

On September 15, Evercore ISI analyst David Togut maintained an Outperform rating on Square, Inc. (NYSE:SQ) and increased his price target for the stock to $371 from $361.

According to the Q2 13F Filings, Lone Pine Capital holds over 5.7 million shares in the company. These shares are valued at $1.39 billion and represent 4.4% of the fund's portfolio. At the end of the second quarter of 2021, 94 hedge funds in the database of Insider Monkey held stakes worth $10.3 billion in Square, Inc. (NYSE:SQ), up from 92 in the preceding quarter worth $9.20 billion.

7. Adobe Inc. (NASDAQ:ADBE)

Lone Pine Capital's Stake Value: $1.4 billion

Percentage of Lone Pine Capital's 13F Portfolio: 4.47%

Number of Hedge Fund Holders: 89

On September 22, JPMorgan analyst Sterling Auty raised the firm's price target on Adobe Inc. (NASDAQ:ADBE) to $680 from $660, and kept an Overweight rating on the shares of the company.

At the end of the second quarter of 2021, 89 hedge funds in the database of Insider Monkey held stakes worth $13.1 billion in Adobe Inc. (NASDAQ:ADBE) down from 107 in the preceding quarter worth $12.1 billion. Stephen Mandel's hedge fund holds over 2.4 million shares. These shares amount to $1.4 billion, representing 4.47% of his fund's portfolio value.

In its second-quarter 2021 investor letter, Richie Capital Group mentioned Adobe Inc. (NASDAQ:ADBE). Here is what the fund said:

Adobe Systems (ADBE – up 24.8%) – In the last 15 years, Adobe has transformed itself into a software behemoth, more than tripling its revenue since 2010. The company is famous for its namesake PDF-reader and photo-editing software Photoshop. However, ADBE sells a full suite of software products through a recurring subscription model. The company transitioned from selling boxed software to recurring subscriptions in 2013 and revenues have grown consistently since. The company achieved $13B in revenue in 2020 with 88% Gross Margins.”

6. Microsoft Corporation (NASDAQ:MSFT)

Lone Pine Capital's Stake Value: $1.42 billion

Percentage of Lone Pine Capital's 13F Portfolio: 4.51%

Number of Hedge Fund Holders: 238

As of Q2 2021, Stephen Mandel of Lone Pine Capital held over 5.27 million shares of the tech giant. These shares were valued at $1.42 billion and represented 4.51% of his hedge fund's portfolio value. By the end of the second quarter of 2021, 238 hedge funds out of the 873 tracked by Insider Monkey held stakes in Microsoft Corporation (NASDAQ:MSFT), worth roughly $62.46 billion, compared to 251 hedge funds in the previous quarter, with stakes worth approximately $58.9 billion.

In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ:MSFT) was one of them. Here is what the fund said:

“We have written extensively about Microsoft in recent commentaries. It was our leading contributor last year and one of our largest weightings within the Portfolio. It continues to experience business momentum through several dominant, essential, and competitively advantaged businesses, like Office 365 and Azure. The markets it competes for are enormous, which gives the company the ability to compound at scale. In the past quarter alone, the company generated over $40 billion in revenue, representing a 17% growth rate. The inherent operating leverage in Microsoft’s business model continues and led to 34% earnings growth this past quarter. Despite the broad rotation we saw in the first quarter and Microsoft’s robust performance in 2020, we think its business fundamentals continue to exhibit strength, and the stock continues to reflect the fundamentals.”

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Disclosure. None. Billionaire Stephen Mandel's Top 10 Stock Picks is originally published on Insider Monkey.