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Steve Mandel's Lone Pine Gets in the Ring With World Wrestling Entertainment

- By Sydnee Gatewood

Lone Pine Capital, the hedge fund founded by Steve Mandel (Trades, Portfolio), disclosed on April 29 it took a 5.1% stake in World Wrestling Entertainment Inc. (WWE).


The Greenwich, Connecticut-based firm picks stocks using a long-short strategy that focuses on bottom-up, fundamental analysis. Using both growth and value methodologies, the firm, whose founder was a former "tiger cub" of Julian Robertson ( Trades , Portfolio ), is known to not hold positions for very long.

According to GuruFocus Real-Time Picks, a Premium feature, Lone Pine invested in 2.25 million shares of the Stamford, Connecticut-based media and entertainment company on April 17, dedicating 1.45% of the equity portfolio to the position. The stock was trading for an average price of $96.11 per share.

The company, which is known for broadcasting professional wrestling events, has a $6.44 billion market cap; its shares were trading around $84.62 on Tuesday with a price-earnings ratio of 73.64, a price-book ratio of 20.55 and a price-sales ratio of 7.74.

The Peter Lynch chart shows the stock is trading higher than its fair value, suggesting it is overpriced.

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On April 25, World Wrestling reported first-quarter results. The company posted an earnings loss of 11 cents per share on $182.4 million in revenue, which were down from the prior-year quarter. The company said performance was impacted by the absence of some of its more popular stars from its programs.

World Wrestling's financial strength and profitability and growth were both rated 7 out of 10 by GuruFocus. Although the company has inadequate interest coverage, the robust Altman Z-Score of 11.6 indicates it is in good fiscal standing.

The company is also supported by margins and returns that outperform competitors and a high Piotroski F-Score of 7, which suggests operating conditions are healthy. The business predictability rank of one out of five stars, though, is on watch. GuruFocus says companies with this rank typically see their stocks gain an average of 1.1% per year.

Of the gurus invested in World Wrestling as of the fourth quarter, Jim Simons' (Trades, Portfolio) Renaissance Technologies had the largest holding with 3.32% of outstanding shares. Other top guru shareholders included Steven Cohen (Trades, Portfolio), George Soros (Trades, Portfolio), Mario Cibelli (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Caxton Associates (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Pioneer Investments (Trades, Portfolio).

Portfolio composition

The firm's $14.77 billion equity portfolio, which was composed of 25 stocks as of the end of the fourth quarter, was heavily invested in the technology and consumer cyclical sectors.

The top five holdings as of the end of the quarter were Adobe Inc. (ADBE), Amazon.com Inc. (AMZN), Microsoft Corp. (MSFT), IQVIA Holdings Inc. (IQV) and UnitedHealth Group Inc. (UNH).

Disclosure: No positions.

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This article first appeared on GuruFocus.