Lone Pine Capital (LPC) manages investments for private investment funds offered to sophisticated and institutional investors. LPC formulates investment objectives, manages investments, and provides reports to investors in the funds. LPC may offer any advisory services, engage in any investment strategy, and make any investment that it considers appropriate, subject to each fund's objectives and guidelines.
Fee Structure
Lone Pine Capital (LPC) does not directly manage investments for individual investors. LPC manages private investment funds, and investors in those funds pay LPC a management fee and may also pay a performance-based incentive allocation.
The Cypress Funds generally pay LPC a monthly management fee equal to 1/12 of 1% (1% on an annualized basis) of each investor's capital account or the net asset value of each series of each class of shares held by an investor. At the end of each fiscal year, LPA is entitled to an incentive allocation in an amount ranging from 13% to 18% of the net capital appreciation.
For the Cascade Funds, investors may choose among management fee only classes or among classes that bear both a management fee and an incentive allocation. Generally, the Cascade Funds pay LPC a monthly management fee ranging from 1/12 of 1% to 1/12 of 2% (1% to 2% on an annualized basis) of each investor's capital account or the net asset value of each series of each class of shares held by an investor. At the end of each fiscal year, LPM is entitled to an incentive allocation in an amount ranging from 10% to 20% of the amount by which the return on the capital account or the net asset value of each series of each class of shares for such fiscal year exceeds a "hurdle amount".
Basin generally pays to LPC a quarterly management fee for investment advisory services equal to 2% of the investors' committed capital, payable in cash in advance on the first day of each fiscal quarter. After the fifth anniversary of the final closing date, the annual management fee calculation percentage is reduced by 0.2% per year (but not below 1.0%), and the management fee calculation is equal to such reduced fee rate multiplied by an amount equal to the sum of (i) the lesser of the fair market value or the cost of the portfolio securities of Basin, plus (ii) the aggregate amount (not to exceed the sum of Basin's uncalled capital commitments and cash and cash equivalents on hand) that its general partner has committed or reserved for follow-on investments in portfolio companies of Basin. Generally, performance-based compensation for Basin is between 20% and 25% of Basin’s net profits.
Baccata generally pays LPC an annual management fee (prorated for partial years) for services rendered to Baccata equal to 1% of the sum of capital commitments of all investors, payable in advance on the first day of each fiscal year. Generally, performance-based compensation for Baccata is between 10% and 20% of Baccata’s net profits.