Billionaire Stanley Druckenmiller’s Newest Stock Picks

DUQUESNE CAPITALStanley Druckenmiller is a legendary investor. He founded Duquesne Capital in 1981 and for some time balanced his management of the fund with being a portfolio manager for George Soros. Druckenmiller shut down Duquesne Capital in 2010, but he continues to manage money as a family office. We have gone through his 13F filings for the second quarter of 2012 and compared it to the filing for the previous quarter, and here are some macro themes that we have noticed in Druckenmiller’s recent activity:

Housing. There has been some speculation that the housing market in the U.S. has bottomed, and Druckenmiller appears to be buying into that hard. He added 3.3 million shares of Lennar (NYSE:LEN) and 4.7 million shares of D.R. Horton (NYSE: DHI), two large homebuilders which each carry a market cap of about $6 billion. So far this year both stocks are up over 40% and have been increasing steadily even as the broader market has tried to regain its highs from the spring. The forward P/E ratios for these stocks are now 22 for Lennar and 20 for D.R. Horton. For Druckenmiller to get into these stock in the second quarter indicates that he felt not only that the housing market was turning around but also implies that he is now bullish on the U.S. in macro terms. The data here might be mixed, but investors who are long housing should take comfort in the fact that such a successful name agrees with them.

Cutting back on restaurants. Two of Druckenmiller’s top five positions from the first quarter’s 13F- McDonalds and Starbucks- were slashed to zero. The fund’s top position, Yum Brands, was cut by about 40%. Out of the four restaurant stocks that were present in the top five slots in Druckenmiller’s portfolio- a heavy commitment to one industry- the only one which was added to over the course of the second quarter was growth monster Chipotle (NYSE:CMG). This one may have been a miss: Chipotle is down over 20% since the end of June as the market revises its growth expectations from “very high” to “high.” Yum Brands, McDonalds, and Chipotle all made our list of the ten most popular restaurant stocks among hedge funds for the first quarter, but we think that it might be a good idea for current investors to follow Druckenmiller in backing out of the industry.

Healthcare. This one was mostly unchanged from the previous quarter, but with the initiation of a 1.2 million share position in Eli Lilly (NYSE:LLY) Druckenmiller now has four of his top ten positions in the healthcare sector. Normally healthcare is treated as a more defensive play, but with the addition of the homebuilders that clearly can’t be what Duquesne is thinking here. Eli Lilly and fellow holding Elan are drug manufacturers specializing in neuroscience, so our guess is that the group is making a growth investment in those two and value-based investments in giants Merck and Pfizer, each of which trades at less than 12 times forward earnings and pays a dividend yield of at least 3.7%.

Cigarettes. Altria Group (NYSE:MO) is another traditionally defensive company, with a beta of 0.4, but in this case we think it’s pretty easy to see why Druckenmiller likes the stock to the tune of 3.4 million shares and the top spot in its portfolio: it is a value and income machine. Altria trades at 16 times trailing earnings and has posted good growth in revenue and earnings in recent quarters, and at current prices the dividend yield is 4.7%. With a market capitalization of $72 billion and a strong position in the cigarette market, the company is a stable long-term investment.

There was a sharp shift in Duquesne’s portfolio as it sold out of restaurants and moved into homebuilders, two industry plays that investors would be wise to note. Druckenmiller also bolstered his investment in neuroscience drugs and kept his growth investments balanced with steady positions in Merck, Pfizer, and Altria Group.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!