sales last week, Steve Mandel ((Professions, Wallet), Lone Pine Capital revealed that it had left its stake in the company. “data-reactid =” 12 “> In the wake of Luckin Coffee Inc. (NASDAQ: LK), revealing that its former chief operating officer made last week’s sales for 2019, Steve Mandel’s Lone Pine Capital (Trades , Portfolio) revealed that he had left his stake in the company.
The Greenwich, Connecticut hedge fund selects stocks using a long-short strategy that focuses on bottom-up fundamental analysis. Combining growth and value strategies, the firm, whose founder was a former “tiger cub” of Julian Robertston, is known for not holding positions for very long.
Choice in real time, a Premium feature, the Mandel firm emptied all 6.06 million shares of the Chinese coffee company on April 2, the same day that the news broke. The transaction had an impact of -1.27% on the equity portfolio. The stock traded for an average price of $ 6.40 per share. “Data-reactid =” 20 “> According to GuruFocus Real-Time Picks, a Premium feature, the Mandel firm emptied the 6.06 million shares of the Chinese coffee company on April 2, which was the same day The news broke. The transaction had a -1.27% impact on the equity portfolio. The stock traded at an average price of $ 6.40 per share.
GuruFocus estimates that Lone Pine has lost 75% on the investment since its inception in the fourth quarter of 2019, when the shares were traded for an average price of $ 25.62 each.
The Beijing-based coffee chain, which is smaller and more technology-based than its biggest competitor Starbucks Corp. (NASDAQ: SBUX), has a market capitalization of $ 1.1 billion; its shares were trading around $ 4.39 Tuesday with a price-to-pound ratio of 1.17 and a price-to-sales ratio of 1.87.
GuruFocus estimates that the stock has dropped more than 80% since the start of the year.
Luckin reported that an internal investigation revealed that his former chief operating officer, Jian Liu, and some of the employees who worked under him had made 2019 sales of about 2.2 billion yuan ($ 310 million). In a statement, the company noted that “certain costs and expenses have also been inflated considerably” as a result of the fabricated transactions, which took place from the second quarter to the fourth quarter of the year. He also noted that as the investigation progressed, more concrete figures would emerge.
Although Luckin’s results and forecasts of previous results are no longer reliable, GuruFocus has rated its financial strength 7 out of 10. The Altman Z score of 2.14, however, indicates that the company is under some financial pressure as her Sloan ratio suggests that she has low quality income.
Weighed in by negative margins and returns that underperform the majority of its competitors, the coffee company’s profitability has further deteriorated with a score of 1 in 10.
Among the remaining gurus invested in Luckin, Steven Cohen (trades, portfolio) has the largest stake with 0.45% of the shares outstanding. Philippe Laffont (Professions, Portfolio) and Paul Tudor Jones (Professions, Portfolio) are also shareholders.
About half of Lone Pine’s $ 18.86 billion equity portfolio, which consisted of 43 stocks at the end of the fourth quarter of 2019, was invested in the cyclical tech and consumer sectors, followed by smaller holdings in industrial spaces, health care and communication services. .
As of December 31, the top five holdings were Alibaba Group Holding Co. (NYSE: BABA), UnitedHealth Group Inc. (NYSE: UNH), Amazon.com Inc. (NASDAQ: AMZN), Adobe Inc. (NASDAQ : ADBE) and Netflix Inc. (NASDAQ: NFLX).
Disclosure: No positions.
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“data-reactid =” 92 “> This article was first published on GuruFocus.