Lone Pine’s Shuffle: Mandel, Meta, and the Chip Game

It’s funny, isn’t it, how much of the financial world revolves around quarterly pronouncements? Every three months, a sort of collective holding of breath occurs as the big players reveal their hands – or, more accurately, their 13F filings. These documents, for the uninitiated, are reports institutional investors with a significant amount of assets under management are required to submit, detailing what they’ve been buying and selling. Last week was one such occasion, and a bit of shuffling at Lone Pine Capital, managed by the reliably astute Stephen Mandel, caught the eye. It’s a story, ultimately, about leaving one kingdom for another – and a lot of silicon.

For those unfamiliar, Lone Pine is a hedge fund known for a blend of sensible value investing and a willingness to dabble in growth stocks. Mandel, a chap who clearly knows his way around a balance sheet, recently decided to completely exit his position in Meta Platforms – Facebook and Instagram to the rest of us. A sizable position, mind you – over $971 million worth of shares. Now, that’s a lot of likes and shares. Over the past couple of years, Meta’s stock had rather impressively doubled, so a bit of profit-taking was entirely understandable. Hedge funds, after all, aren’t charities. Their average holding period is a mere 16.5 months, which, when you think about it, is less time than it takes to properly mature a good cheddar. Still, the complete jettison of the stock raised a few eyebrows.

Leaving the Metaverse Behind

There was, of course, the matter of Meta’s recent spending on artificial intelligence. While everyone seems to be throwing money at AI these days, Mark Zuckerberg appears to be particularly enthusiastic. Investors, it seems, have a limit to their tolerance for ambitious, long-term projects, even if they promise to revolutionize the way we interact with cats online. And it’s not as if Meta’s core business is exactly crumbling. It remains a dominant force in social media, commanding hefty advertising rates. But Mandel, it seems, decided to seek greener pastures – or, perhaps more accurately, pastures paved with semiconductors.

Enter the Chip Kingdom

The beneficiary of this shift in allegiance? Taiwan Semiconductor Manufacturing, or TSMC as it’s more commonly known. Now, TSMC isn’t a household name like Facebook, but it’s arguably more important. They make the chips that power pretty much everything – smartphones, computers, and increasingly, the artificial intelligence systems everyone is so excited about. Mandel had been gradually reducing his stake in TSMC over the past few years, but the company’s soaring stock price, driven by the insatiable demand for chips, has propelled it to become Lone Pine’s largest holding. It’s a testament to the fact that sometimes, the most exciting innovations aren’t about creating new platforms, but about providing the foundational building blocks for everything else.

The demand for graphics processing units, or GPUs, which are essential for AI, is, to put it mildly, off the charts. TSMC is scrambling to expand its production capacity, and they’re not alone. The entire semiconductor industry is facing a supply crunch, and that’s given TSMC significant pricing power. But even before the AI boom, TSMC was a solid company with a strong foundation. They’re a key supplier to the world’s leading technology companies, and they have a reasonably inexpensive valuation, at least by current market standards. A forward price-to-earnings ratio of 21 isn’t outrageous for a company projected to grow its sales by 24% in 2027.

So, what does it all mean? Well, it suggests that Stephen Mandel, a man who clearly knows his way around a spreadsheet, believes that the future of technology lies not in virtual worlds, but in the physical realm of silicon and semiconductors. It’s a reminder that sometimes, the most exciting investments aren’t about chasing the latest hype, but about understanding the underlying forces that are shaping the future. And, perhaps, it’s a good reminder that even the most sophisticated investors can’t predict the future with certainty. They can, however, make informed guesses, and sometimes, those guesses turn out to be remarkably accurate.

2026-02-26 12:16

Leaving the Metaverse Behind

Enter the Chip Kingdom

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