Steve Mandel's Hedge Fund Performance Slips

As hedge funds publish their third quarter letters, Lone Pine's Steve Mandel joins the ranks of hedge fund managers with lackluster performance.


Mandel started Lone Pine Capital in 1997 as a long-short equity fund, and it's now one of the largest in the industry.

Mandel, one of Julian Robertson's famed "Tiger cubs," runs Lone Pine Capital which has $16 billion under management according data from an industry source.

Robertson is one of the pioneer's of the hedge funds industry. His Tiger Global Management fund became the world's largest in 1998 with over $23 billion and reportedly compounded a gross return rate of 31.5 percent between 1980 and 2000 before its eventual demise that year.

Lone Pine's $8.7 billion Lone Cascade family of hedge funds took a beating in the third quarter with Lone Cascade down 14.3 percent, Lone Cypress down 9.8 percent, Lone Kauri down 8 percent and Lone Dragon Pine down 25.1 percent vs. the S&P 500, which was down 13.9 percent, according to an investor letter obtained by CNBC.

Year-to-date the Lone Cascade fund is down 9.2 percent, Cypress is down 4.2 percent, Kauri down 3.8 percent and Lone Dragon Pine down 25.3 percent versus the S&P 500, which was down 8.7 percent.

"It was a rough quarter" Mandel said. He described their performance as "quite respectable until the last week of September." The sell off in that last week is what hurt Mandel's performance.

Mandel is still a fan of stocks. "Stocks globally are currently cheaper, based on consensus earnings estimates, than at any time in our 14-year history," Mandel said.

He blamed currently higher risk premiums and lower earnings multiples on "a lack of political leadership, coupled with high levels of developed world government debt."

Lone Cascade has reeled in its risk profile in part by exiting bank stocks.

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