What Is Stephen Mandel's Favorite Stock?

Stephen Mandel runs the $15 billion Lone Pine Capital fund and is bullish on El Paso (EP) despite the weakness in natural gas. El Paso transports more than 25% of natural gas delivered to U.S. consumers.

Mandel initiated the position during Q4 2011 and increased it nearly 5X in Q1 2012. El Paso is now over 6% of the portfolio.

EP Chart

EP data by YCharts

The company has a significant amount of long term debt and a high ratio of debt to net income.

EP Long Term Debt Chart

EP Long Term Debt data by YCharts

This will continue to increase with the upcoming merger. El Paso is merging with Kinder Morgan (KMI) on May 24 of this year which will create a powerhouse in the energy sector. Mr. Rich Kinder, Chairman and CEO of Kinder Morgan said on a recent M&A call, "I think putting these 2 companies together strategically is a great fit... we'll have 80,000 miles of pipeline, 67,000 of which will be natural gas pipes and an enterprise value of approximately $94 billion."

KMI Long Term Debt Chart

KMI Long Term Debt data by YCharts

The combined company will also have a large amount of debt but doesn't seem to bother Mandel.

Mandel's other top positions are in Google (GOOG), Apple (AAPL) and Priceline (PCLN). Somewhat surprisingly, El Paso managed to outperform all of the tech high flyers since the beginning of fourth quarter of 2011.

EP Chart

EP data by YCharts



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