Stephen Mandel Jr’s Lone Pine Capital suffered a sharp reversal in the third quarter, with its long-short fund losing 31% after a strong first half, as several Tiger Cub hedge funds also saw returns eroded by weakness in tech and AI-related stocks, according to a report by Institutional Investor.

The report cites an unnamed investor famailar with the firm's performance as revealing that Lone Pine’s long-short strategy fell approximately 31% during the three months to September, including a loss of around 25% in July. The decline left the fund broadly flat for 2026. Its long-only vehicle dropped 23% over the quarter but remained up 6% for the year.

The results contrast with the funds’ strong second-quarter performance, when the long-short strategy gained 51% and the long-only portfolio advanced 50%.

Lone Pine manages between $18bn and $19bn, with approximately two-thirds to three-quarters of its capital allocated to the long-only strategy. Around 80% of its investments are in US assets. The greater decline in the long-short fund suggests its short positions also contributed to the weaker performance.

The firm substantially reshaped its portfolio during the second quarter, establishing five of its seven largest US-listed long positions during the period. Those seven holdings represented approximately 40% of its US portfolio at the end of June.

Its largest US-listed position was Nebius Group, the Dutch artificial intelligence infrastructure provider. Lone Pine established a holding of nearly 4.3 million shares valued at $1.176bn, equivalent to 7.2% of its US portfolio. The stock fell by almost one-third in July after reaching a peak at the end of June. Although it subsequently recovered some ground, it ended the third quarter approximately 15% lower.

Other new technology investments included data storage company Seagate Technology, which became Lone Pine’s third-largest US-listed long position, and semiconductor equipment maker Applied Materials, which ranked fifth. The stocks declined 4.5% and 29%, respectively, during the third quarter.

Mandel’s firm also added positions outside technology, including home improvement retailer Home Depot and German industrial gases group Linde.

The portfolio overhaul involved several significant disposals. Lone Pine exited Vistra, the electricity generation and retail company that had been its largest US-listed long at the end of the first quarter. It also sold its holding in independent power producer Talen Energy and exited Swiss specialty chemicals business Clariant, previously its 12th-largest long position.

Other hedge funds founded by former employees of Julian Robertson’s Tiger Management also recorded setbacks during the third quarter, although the impact on full-year returns varied.

Robert Citrone’s Discovery Capital Management lost approximately 10% during the quarter but remained up 16.8% for the year, outperforming the Nasdaq Composite’s 15.6% gain over the same period. The firm pursues macroeconomic and fundamental investment opportunities across developed and emerging markets.

Philippe Laffont’s Coatue Management surrendered around half of its first-half gains in the third quarter, ending September with a return of slightly more than 12% for the year.

Light Street Capital Management also gave back a substantial portion of its earlier advances. Its long-short fund, which had gained more than 37% in the first half, ended the third quarter up 15.7% for 2026. Glen Kacher’s long-only fund performed more strongly, returning 26.75% through the end of September following a 40% gain in the first half.

Chris Hansen’s Valiant Capital Management was up just 1.42% for the year after recording double-digit losses in both July and August.

Flight Deck Capital, run by Jay Kahn, delivered a stronger overall result despite a difficult July, when the fund lost 25%. Having gained nearly 119% through June, it finished the third quarter up approximately 80% for 2026, supported by positive performance in August and September.