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Steve Mandel Starts 6 New Positions in 4th Quarter

- By Sydnee Gatewood

Lone Pine Capital leader Steve Mandel (Trades, Portfolio) disclosed six new positions in his fourth-quarter 2018 portfolio, which was released last week.


A protege of Tiger Management's Julian Robertson (Trades, Portfolio), the investor's Greenwich, Connecticut-based hedge fund picks stocks using a long-short strategy that focuses on bottom-up, fundamental analysis. Using both value and growth methodologies, he is known to not hold positions for very long.

Based on these strategies, Mandel established holdings in Booking Holdings Inc. (BKNG), Mastercard Inc. (MA), Tiffany & Co. (TIF), Autodesk Inc. (ADSK), Salesforce.com Inc. (CRM) and StoneCo Ltd. (STNE) during the quarter.

Booking Holdings

After selling out of Booking Holdings in the third quarter, the guru purchased a new 353,496-share holding for an average price of $1,827.19 per share. The trade had an impact of 4.12% on the equity portfolio.

The Connecticut-based online travel agency has an $89.58 billion market cap; its shares were trading around $1,922.55 on Tuesday with a price-earnings ratio of 33.18, a price-book ratio of 9.06 and a price-sales ratio of 6.66.

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

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GuruFocus rated Booking Holdings' financial strength 7 out of 10. Although the company has issued approximately $2 billion in new long-term debt over the last three years, it is at a manageable level as a result of adequate interest coverage. In addition, the robust Altman Z-Score of 6.33 indicates the company is in good financial standing. The company's profitability and growth scored a 9 out of 10 rating, driven by operating margin expansion, good returns, consistent revenue and earnings growth and a moderate Piotroski F-Score of 6, which implies business conditions are stable. The travel agency also has a business predictability rank of 3.5 stars out of five, which, according to GuruFocus, means it sees its stock gain an average of 9.3% per year.

Of the gurus invested in Booking Holdings, Dodge & Cox has the largest stake with 2.51% of outstanding shares. Other guru shareholders include Frank Sands (Trades, Portfolio), Chase Coleman (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Spiros Segalas (Trades, Portfolio), Ruane Cunniff (Trades, Portfolio), Bill Nygren (Trades, Portfolio), First Eagle Investment (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio).

Mastercard

Having divested Mastercard from the portfolio in the first quarter, Mandel bought a new 2.9 million-share stake for an average price of $197.68 per share, dedicating 3.76% of the equity portfolio to the position.

The financial services company, which is headquartered in New York, has a market cap of $225.29; its shares were trading around $221.55 on Tuesday with a price-earnings ratio of 39.56, a price-book ratio of 42.34 and a price-sales ratio of 15.51.

According to the Peter Lynch chart, the stock is overvalued.

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Mastercard's financial strength was rated 7 out of 10 by GuruFocus. In addition to having good interest coverage, the strong Altman Z-Score of 10.37 suggests the company is in good fiscal health. Driven by operating margin expansion and good returns, the company's profitability and growth scored an 8 out of 10 rating. In addition, the company is strengthened by a high Piotroski F-Score of 7, which suggests operating conditions are healthy, and a one-star business predictability rank. GuruFocus says companies with this rank typically see their stocks gain an average of 1.1% per year.

With 0.79% of outstanding shares, Tom Russo (Trades, Portfolio) is Mastercard's largest guru shareholder. Segalas, Chuck Akre (Trades, Portfolio), Warren Buffett (Trades, Portfolio), Pioneer, Nygren, Ruane Cunniff, Lee Anslie, Steven Cohen (Trades, Portfolio) and many other gurus also have positions in the stock.

Tiffany

Mandel invested in 6.7 million shares of Tiffany for an average price of $100.91 per share, allocating 3.69% of the equity portfolio to the stake. He previously exited a position in the stock in the first quarter of 2015.

The New York-based luxury jeweler has a $10.9 billion market cap; its shares were trading around $89.44 on Tuesday with a price-earnings ratio of 24.98, a price-book ratio of 3.62 and a price-sales ratio of 2.49.

Based on the Peter Lynch chart, the stock appears to be overvalued.

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GuruFocus rated Tiffany's financial strength 7 out of 10. In addition to having adequate interest coverage, the Altman Z-Score of 5.84 indicates the company is in fiscally strong. The company's profitability and growth scored an 8 out of 10 rating, boosted by margins and returns that outperform competitors, a high Piotroski F-Score of 8 and a three-star business predictability rank. In addition to having consistent earnings and revenue growth, GuruFocus says companies with this rank typically see their stock prices gain an average of 8.2% per year.

With his purchase of 5.56% of outstanding shares, Mandel became Tiffany's largest guru shareholder. Other top guru investors include First Eagle, Jana Partners (Trades, Portfolio), Segalas, Jim Simons (Trades, Portfolio)' Renaissance Technologies, Ron Baron (Trades, Portfolio), Pioneer, John Rogers (Trades, Portfolio), Charles de Vaulx (Trades, Portfolio) and PRIMECAP Management (Trades, Portfolio).

Autodesk

The investor picked up 3.8 million shares of Autodesk for an average price of $134.57 per share, giving it 3.34% space in the equity portfolio. He previously closed a position in the stock in the first quarter of 2016.

The software company, which is based in California, has a market cap of $35.04 billion; its shares were trading around $160.01 on Tuesday with a forward price-earnings ratio of 50 and a price-sales ratio of 14.68.

The median price-sales chart shows the stock is trading higher than its historical value.

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Autodesk's financial strength was rated 4 out of 10 by GuruFocus. Despite having poor earnings quality and declining revenue per share, the Altman Z-Score of 4.62 suggests the company is in good fiscal health. The company's profitability and growth scored a 5 out of 10 rating. While the company has negative margins and returns that underperform industry peers, the Piotroski F-Score of 6 indicates operating conditions are stable. The company also has a one-star business predictability rank.

Mandel became the company's largest guru shareholder with his purchase of 1.75% of outstanding shares. Other guru shareholders include Coleman, Jana Partners, Ken Fisher (Trades, Portfolio), Pioneer, Simons' firm, PRIMECAP, Ainslie, Stanley Druckenmiller (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio).

Salesforce.com

After divesting of Salesforce in the first quarter of 2018, Mandel opened a new 658,000-share holding for an average price of $136.77 per share. The trade expanded the equity portfolio 0.61%.

The San Francisco-based software company has a $123.34 billion market cap; its shares were trading around $161.37 on Tuesday with a price-earnings ratio of 171.52, a price-book ratio of 8.31 and a price-sales ratio of 9.90.

According to the Peter Lynch chart, the stock is overvalued.

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Salesforce's financial strength and profitability and growth were both rated 7 out of 10 by GuruFocus. Despite having poor interest coverage, the Altman Z-Score of 6.69 suggests the company is financially sound. While the company's margins and returns are mediocre, it is strengthened by a moderate Piotroski F-Score of 6 and a four-star business predictability rank. In addition to having consistent earnings and revenue growth, GuruFocus says companies with this rank typically see their stocks gain an average of 9.8% per year.

Of the gurus invested in Salesforce, Sands has the largest stake with 1.1% of outstanding shares. Other top guru shareholders include Segalas, Halvorsen, Fisher, Coleman, Pioneer, Daniel Loeb (Trades, Portfolio), Druckenmiller, Philippe Laffont (Trades, Portfolio) and PRIMECAP.

StoneCo

The guru purchased 3.12 million shares of StoneCo, which went public in October, for an average price of $22.95 per share, allotting 0.39% of the equity portfolio to the stake.

The Brazilian financial services company, which facilitates the conduction of e-commerce for merchants and integrated partners, has a market cap of $6.34 billion; its shares were trading around $22.88 on Tuesday with a price-earnings ratio of 190.64 and a price-book ratio of 38.08.

The price chart shows the stock has tumbled approximately 26% since its initial public offering.

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As a result of a large debt load, GuruFocus rated StoneCo's financial strength 3 out of 10. Despite having strong returns that outperform industry peers, the company's profitability and growth fared even worse with a 1 out of 10 rating.

With 5.11% of outstanding shares, Buffett is the company's largest guru shareholder. Coleman and Baron also have positions in the stock.

Additional trades

During the quarter, Mandel also added to several holdings, including Amazon.com Inc. (AMZN), Facebook Inc. (FB), UnitedHealth Group Inc. (UNH), Constellation Brands Inc. (STZ), TransUnion (TRU) and CSX Corp. (CSX).

The guru's $14.77 billion equity portfolio, which is composed of 25 stocks, is heavily invested in the technology and consumer cyclical sectors.

Disclosure: No positions.

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This article first appeared on GuruFocus.