Lone Pine gives back Q3 gains as AI stocks slide
Stephen Mandel Jr’s Lone Pine Capital suffered a sharp reversal in the third quarter, with its long-short fund losing 31% after a strong first half, as several Tiger Cub hedge funds also saw returns eroded by weakness in tech and AI-related stocks, according to a report by Institutional Investor. The report cites an unnamed investor famailar with the firm's performance as revealing that Lone…
Lone Pine Capital experienced a sharp decline in its long-short fund during the third quarter, losing 31% after a strong start to the year, according to Institutional Investor. This decline contrasted with the fund's impressive second-quarter performance, when it gained 51%. The fund's long-only strategy fell 23% during the quarter but remained up 6% for the year.
Lone Pine, which manages between $18bn and $19bn, allocated around two-thirds to three-quarters of its capital to the long-only strategy, with 80% of its investments in US assets. The fund's largest US-listed position was in Nebius Group, an artificial intelligence infrastructure provider. The decline in the long-short fund's performance suggests that its short positions also contributed to the weaker results.
The firm had substantially reshaped its portfolio during the second quarter, establishing five of its seven largest US-listed long positions. However, several of these investments, such as the stocks of Seagate Technology and Applied Materials, declined during the third quarter. Other significant portfolio changes included the exit from Vistra, Talen Energy, and Swiss specialty chemicals business Clariant.
Other hedge funds founded by former employees of Tiger Management also recorded setbacks during the third quarter.
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