Editor's note: Pro Strategy is a column on how to use the strategies of the smartest minds on Wall Street to generate quality investment ideas.
Take-Two is one of the most controversial and heavily shorted stocks in the market. Is it a one-trick pony or are the skeptics missing a secular paradigm shift? Using legendary hedge fund manager Stephen Mandel's investing framework may give us the answer.
The Lone Pine Capital founder is considered among hedge fund investors to be one of smartest fundamental growth managers in the industry.
"I think Steve is one of the very unique individuals in our business who is both a great analyst and a great portfolio manager. Most are great at one or the other, but Steve is world class in both areas," said Mark Yusko, CEO of Morgan Creek Capital Management, an alternative investment firm.
Mandel honed his craft as the consumer analyst for Julian Robertson's Tiger Management. The firm has $26 billion of assets under management, according to a source.
Here's CNBC Pro's analysis, using Mandel's paradigm:
For his long investments, the hedge fund manager looks for companies with a solid return on capital, good cash flow, a prudent balance sheet, competitive barriers and a strong management team, according to a Lone Pine investor presentation.