Investing

Billionaire Investor Jumps From One Iconic Brand to Another With Latest Move 

Will Ashworth

Published: February 2, 2025 7:48 am

According to Bloomberg, Lone Pine Capital made approximately $5 billion in investment gains for its investors in 2024. Founded by Stephen Mandel Jr. in 1996, the one-time Tiger Cub outsources the day-to-day operations but maintains a visible presence at the Greenwich-based hedge fund.

In 2023, Mandel is said to have made $500 million personally, a nice rebound from Lone Pine’s losses in 2022, when the long/short fund lost 32%, while its long-only fund dropped 42%. It also has a fund for private investments.   

Given the gains in 2024, Mandel is likely to have recouped much of his losses from 2022’s terrible year in the markets. 

Bloomberg estimates the firm’s assets under management at $18.2 billion. According to its Q3 2024 13f holdings report, $13.41 billion was invested in 29 stocks, an average of $462 million per company. 

In the third quarter, the hedge fund closed out four stocks, added six positions, reduced its holdings in 12 stocks, and added nine new names.

Lone Pine significantly reduced its exposure to one of the country’s leading providers of personal care and home fragrance products. Then, it turned around and poured the proceeds into another iconic brand. 

Here’s why. 

Key Points About This Article:

• Lone Pine Capital closed out its Bath & Body Works (NYSE:BBWI) holdings in Q3 2024 after nearly five years of owning the stock. 
• Billionaire Stephen Mandel Jr.’s hedge fund poured the proceeds into Starbucks (NASDAQ:SBUX), a struggling but iconic American brand. 
• The coffee chain’s turnaround is in the early stages, but CEO Brian Niccol is willing to look at all possible ideas to improve the business. 
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Holding for Four Years Is a Long Time for Most Hedge Funds

Lone Pine sold 11.32 million shares of Bath and Body Works (NYSE:BBWI) in the third quarter, closing out its position after four-and-a-half years, an exceptionally long time for a hedge fund.

When the hedge fund first acquired shares in the company in Q1 2020, it was still part of L Brands, Leslie Wexner’s retail conglomerate. Lone Pine acquired 26.27 million shares. In August 2021, L Brands spun out its Victoria’s Secret (NYSE:VSCO) into its own public company. As a result, L Brands was renamed Bath & Body Works.

At the time of the spin-off, Lone Pine owned 24.30 million shares of BBWI and 8.61 million of VSCO. L Brands shareholders received one share of VSCO for every three shares held in the parent company. The hedge fund sold its entire position in Victoria’s Secret in Q2 2022. As of March 31, 2022, it had 22.22 million shares of BBWI. 

Therefore, Lone Pine sold 57% of its original position in Bath & Body Works (L Brands) over 17 quarters and the remaining 43% in the latest quarter. 

Why now?

According to WhaleWisdom.com, Lone Pine’s average price for BBWI stock was $22.40. The hedge fund missed out on selling when BBWI’s share price hit $75 in late 2021. It likely sold the shares between $40 and $50 in the third quarter, figuring there were better opportunities elsewhere. 

The shares have rebounded since hitting a 52-week low of $26.21 last September. As the saying goes, “A bird in the hand is worth two in the bush.”

It invested the approximate proceeds of $500 million in an even more iconic brand than Bath & Body Works, which L Brands founded in 1990 as Express Inc.’s beauty line. 

Starbucks Is on the Ropes

The hedge fund acquired 4.05 million shares of Starbucks (NASDAQ:SBUX) in the third quarter at an estimated average price of $84.54. It instantly became Long Pine’s 18th-largest holding, accounting for 2.95% of its portfolio.

While the hedge fund’s purchase of Starbucks, which cost approximately $320 million, wasn’t its most significant expenditure in Q3, it was the value/turnaround play of the nine new stocks bought during the quarter. 

As most investors know, former Chipotle Mexican Grill (NYSE:CMG) CEO Brian Niccol was hired by the company in August to turn around its struggling business. He’s been a very busy man ever since. 

On Oct. 31, Niccol revealed more of his turnaround strategy for the company. 

High on the list of things to change is the customization available on the mobile app. There are just too many options, and many of them are unnecessary. It makes life easier for the baristas and reduces the time spent making the drink. 

Anyone who regularly goes to Starbucks knows that the menu has become a telephone book of items to order. I get the same Americano with a splash of milk every time, though I might change that up once a month if I’m lucky. I have no idea who’s buying many of these products. So, Niccol is cutting the number of items offered. Too many choices have been proven to be a bad thing. 

Lastly, it wants to return to being a “third place” where customers go that’s neither work nor home. 

To do that, it has created a code of conduct for its stores that emphasizes the seating, wi-fi, and bathrooms for customers and employees. You probably won’t be kicked out for just minding your business, but if you linger without ordering, you could be asked to leave. 

That, to me, is Business 101. Give your most loyal customers a good experience, and they’ll be happy to keep spending. 

Starbucks stock hit an all-time high of $126.32 on July 1, 2021. Lone Pine is betting it can reach that sooner rather than later. I guess we’ll see.