The 2016 Rich List: Stephen Mandel Jr.

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In a quarterly letter to investors in late 2013, Lone Pine Capital’s Stephen Mandel Jr. lamented the difficulty of short-selling. “There has been much gnashing of teeth in recent years questioning the ability to be a successful short-seller,” the missive said. “A crowded playing field, the high correlation among stocks, lack of short rebate and the absence of irrational exuberance creating concrete ‘bubbles’ have all been blamed.” He stressed that it is an uphill fight to make absolute dollars shorting except during a bubble. “Opportunities to make significant money shorting stocks are sporadic and infrequent,” the letter added, noting at the time that this opportunity had occurred just twice in the preceding 15 years, during the Internet-telecom and mortgage bubbles. But when they occur, “the profit opportunities are very significant,” Mandel added, assuring investors that shorting individual stocks remains an ongoing, active part of his firm’s business. That commitment paid off significantly last year, allowing the founder of the Greenwich, Connecticut–based firm to qualify for the Rich List for the third time in four years. Last year Lone Cypress — Mandel’s largest long-short fund — gained 8.7 percent, while his two smaller long-short funds, Lone Kauri and Lone Tamarack, returned 8.9 percent and 8.3 percent, respectively. Mandel generated more than half his gains in Lone Cypress in the fourth quarter, thanks in large part to those negative bets. “Our longs underperformed, dragged down by the few positions associated with energy or leverage or both,” the firm stated in its fourth-quarter letter. “Our shorts added significant value, with declines in industrial, media and retailing stocks pacing the gains.” The bulk of the year’s returns came from U.S. shorts, but European shorts also boosted results. When not investing, Mandel, 60, is involved in a variety of charities and programs related to education, health and the environment. He has supported charter schools and other efforts that could help at-risk children get into college. He has donated more than $25 million to Teach For America and sits on the organization’s board.

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