Lone Pine Capital posted strong gains in the second quarter, making its two main funds profitable after sharp losses in the first quarter.
Lone Cypress, the Tiger Cub’s long-short hedge fund, rose 13 percent in the three months through June, according to a person with knowledge of the matter. The fund is now up 6 percent for the year, the person said.
The firm’s long-only fund, Lone Cascade, soared with a gain of 35 percent in the second quarter and is now up 10 percent for the year, person said. That compares with an 18 percent loss in the first quarter.
Lone Pine declined to comment.
The performance disparity between the long-short and long-only funds clearly indicates the firm lost a sizable amount of money on its short book. But this is not surprising given the Standard & Poor’s 500 index posted its strongest quarterly gain in more than two decades during the three months through June.
Lone Pine benefited from the stock market’s surge, which began in late March, particularly with its U.S. listed long bets. Several stocks in Asia fared well too, while its European positions added slightly to returns, according to the person. Meanwhile, its net exposure is now at the higher end of its usual range of 40 percent to 60 percent, the person said.
Lone Pine’s funds are run on a day-to-day basis by David Craver, Mala Gaonkar, and Kelly Granat. That hasn’t kept founder Stephen Mandel from spending more or less the same amount of time in the office — at least before the economic shutdowns tied to Covid-19.
The hedge fund firm’s total assets under management stood at $24 billion at the end of last year. At the end of the first quarter, the firm had between $16 billion and $17 billion invested in long positions of U.S. common stocks, according to a regulatory filing.
In the second quarter Lone Pine’s gains were heavily driven by several of the most popular and widely-held internet, tech and consumer stocks.
We don’t know what it bought in April, when stocks were still way off their highs. We do know that e-commerce giant Amazon.com, its third largest U.S. long at the end of March, surged about 41 percent in the second quarter.
Cloud computing giant Microsoft Corp., its fourth largest U.S. long, jumped 29 percent in the second quarter. Netflix, its fifth largest long, rose 21 percent in the same period.
Visa, its largest new position in the first quarter, jumped 20 percent in the three months through June, while Global Payments rose 18 percent. Chinese e-commerce giant Alibaba Group Holding, Lone Pine’s largest long position, was up 11 percent for the second quarter.
The sole non-tech company among Lone Pine’s top-five holdings was UnitedHealth Group. Shares of the health-care company, the firm’s second largest long, rose 18 percent in the second quarter.