Key Takeaways
- • Lone Pine Capital's flagship Cypress fund was up 44% year-to-date at the end of June but finished September up just 0.6%, according to Bloomberg, after AI and tech stock bets reversed.
- • Cypress lost nearly 25% in July alone as AI and tech stocks sold off, with Iran tensions and an oil price spike worsening the rout.
- • Lone Pine bought five of its seven biggest US stock positions in Q2, which together made up about 40% of its US portfolio, per figures cited by Hedgeweek.
- • The largest position, Nebius Group, represented roughly $1.18 billion and fell nearly a third in July; Applied Materials dropped 29%.
- • Lone Pine manages about $19 billion and had posted double-digit gains three years in a row before this drawdown.
Summary
Lone Pine Capital's flagship hedge fund, Cypress, gave back nearly all of its 2026 year-to-date gains in the third quarter, according to Bloomberg. The fund was up 44% at the end of June but finished September up just 0.6%. Lone Pine, which manages about $19 billion, had posted double-digit annual gains for three consecutive years before the reversal.
The bulk of the losses came in July, when Cypress fell nearly 25% as AI and technology stocks sold off. Geopolitical tensions involving Iran and a spike in oil prices compounded the decline. Per figures cited by Hedgeweek, Lone Pine had bought five of its seven largest US stock positions during the second quarter, which together accounted for about 40% of its US portfolio.
The largest holding, Nebius Group, a Dutch company that rents out AI computing power, represented about $1.18 billion of the fund and fell nearly a third in July. Applied Materials, a chipmaking equipment maker, dropped 29%, while ASML, AppLovin, Corning, and Home Depot also declined. Cypress's short positions, which bet on certain stocks falling, also lost money.
Lone Pine is not alone among high-profile AI investors to be hit. In July, AI bets nearly sank the hedge fund of former OpenAI researcher Leopold Aschenbrenner, who has since re-entered AI equities. Separately, Michael Burry, the investor known for The Big Short, holds put options on Nebius, positioning for a decline. In a September 28 post, Burry wrote, "Fundamentally, I am moving timelines up." The episode has renewed debate over concentrated AI exposure and the risks of leveraged hedge fund positioning in the sector.
The bulk of the losses came in July, when Cypress fell nearly 25% as AI and technology stocks sold off. Geopolitical tensions involving Iran and a spike in oil prices compounded the decline. Per figures cited by Hedgeweek, Lone Pine had bought five of its seven largest US stock positions during the second quarter, which together accounted for about 40% of its US portfolio.
The largest holding, Nebius Group, a Dutch company that rents out AI computing power, represented about $1.18 billion of the fund and fell nearly a third in July. Applied Materials, a chipmaking equipment maker, dropped 29%, while ASML, AppLovin, Corning, and Home Depot also declined. Cypress's short positions, which bet on certain stocks falling, also lost money.
Lone Pine is not alone among high-profile AI investors to be hit. In July, AI bets nearly sank the hedge fund of former OpenAI researcher Leopold Aschenbrenner, who has since re-entered AI equities. Separately, Michael Burry, the investor known for The Big Short, holds put options on Nebius, positioning for a decline. In a September 28 post, Burry wrote, "Fundamentally, I am moving timelines up." The episode has renewed debate over concentrated AI exposure and the risks of leveraged hedge fund positioning in the sector.
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