Lone Pine Capital, the hedge fund founded by Stephen Mandel Jr, posted a solid performance in the third quarter, with its long-short fund, Lone Cypress, gaining 5%, bringing its year-to-date return to approximately 23%, according to a report by Institutional Investor.
The report cites an unnamed investor source as also confirming that the firm’s long-only Loan Cascade fund saw an 8% rise for the quarter and is now up 25% for the year.
The gains have helped the fund recoup earlier losses, including Q4 2021 declines of 12% and 10% at Lone Cypress and Lone Cascades, respectively, coupled with annual losses the following year of 36% and 42% amid a broader bear market.
Both funds rebounded in 2023, with Lone Cypress up 19% and Lone Cascade surging 32%. Under the terms of the firm’s modified performance fee structure, Loan Pine can charge half of its performance fee even before fully recovering previous losses, but will only return to charging the full fee once it recovers 200% declines.
Currently managing about $17 billion—down from $31 billion at the end of 2020 — Lone Pine’s portfolio is heavily invested in major tech stocks and beneficiaries of artificial intelligence. As of the second quarter, its largest holding, Taiwan Semiconductor Manufacturing, accounted for about 8.5% of its assets, driven by the company’s close ties to AI chipmaker Nvidia, which Lone Pine does not own.
Other significant positions include Microsoft, Amazon, and Meta Platforms, making up 20% of the firm’s assets. Non-tech holdings among its top ten include tobacco giant Philip Morris, private equity firm KKR, and Vistra Corp, a leading electricity and power generation company that has performed well this year.
