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Hedge fund Lone Pine Capital is launching a concentrated and long-term fund in response to aggressive “multi-strategy” hedge funds and passive investors that are rewiring the stock market.
The $19bn hedge fund, founded by Stephen Mandel, is investing $500mn of its own money in the new fund, which will begin to take in outside capital from January, according to investor documents seen by the Financial Times.
The new Lone Mountain Pine strategy would “focus less on companies that may be experiencing momentary acceleration” and more on stocks that “can compound value consistently over many years”, the hedge fund’s management committee wrote in a letter to investors last month.
So-called long-short equity hedge funds — which buy stocks they think will do well and bet against companies they think will underperform — often hold positions in hundreds of public companies. But Lone Pine’s new fund will only own up to 20 stocks at a time, and plans to hold them for five years or longer, according to the letter.
Mandel is among the most successful of the so-called “Tiger cubs” that emerged from the Tiger Management hedge fund started by famed stockpicker Julian Robertson.
Stockpicking has changed dramatically since he started Lone Pine in 1997, however. Trillions of dollars have flowed out of traditional, actively managed investment funds and into cheap index trackers, while high-frequency trading expertise has helped the likes of Citadel, Millennium and DE Shaw evolve into huge players in the markets.
Lone Pine is betting that those market forces unmoor companies’ share prices from their fundamental financial performance and create trading opportunities for investors able to hold stocks for years, according to the documents.
Other big hedge fund managers have pursued similar strategies, among them Bill Ackman, who has combined concentrated bets on a handful of stocks with raising permanent capital.
But Lone Pine’s launch comes at a time of renewed interest in alternative investment strategies. Hedge funds took in more than $37bn of net flows in the first half of 2025, already the biggest haul in a decade, according to data from Hedge Fund Research.
Long-short hedge funds’ fortunes have started to improve after suffering one of their worst periods of performance in 2022, shedding billions of dollars and leading to years of net outflows for the strategy.
Despite the buy and hold strategy of Lone Pine’s new fund, investors will be allowed to redeem all of their money from the fund on a quarterly basis, according to a person familiar with the matter, meaning that it could be forced to dispose chunks of its holdings in a short period of time if investors pull their cash.
The hedge fund has owned shares in Amazon, Meta and Microsoft for more than a decade, according to regulatory filings. All three tech companies are still among Lone Pine’s biggest holdings.
Mandel’s long-short fund gained 23 per cent between the start of the year and the end of September, and 26 per cent in its long-only fund, according to a person familiar with its performance.
Additional reporting by Costas Mourselas in London
