Bullish On Trump-led America, Druckenmiller Sells Gold, Bets On Economy

Stanley Druckenmiller is an American hedge fund manager who ran the $12 billion Duquesne Capital till 2010. Forbes has ranked him 128 on the list of the richest people with a net worth of $4.4 billion. He closed the fund because he felt unable to deliver high returns to his clients. Druckenmiller now manages funds for his own family office, Duquesne Family Office LLC. He feels very optimistic about the stock market after the Donald Trump won the presidential election. He reversed his opinion about gold and said that he had sold all of his gold positions on November 8th. He has become bullish on the global economic growth prospects and thinks that bond prices are set to fall. He thinks that the central banks have been artificially suppressing interest rates and this is the reason he is shorting German and UK government bonds. In the article below we look at some of his holdings.

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Freeport-McMoRan Inc. (NYSE:FCX) is one of the largest producers and refiners of copper ore in the world. Besides copper, the company also has extensive oil and gas, and molybdenum operations. The company owns mines in USA, South America, Indonesia and Congo. It also owns copper smelters and molybdenum conversion facilities in USA and Europe. The stock has been doing well, advancing by 112% year-to-date, due to a recovery in commodity prices. Commodity producers are expected to do well under president Trump with his focus on infrastructure spending. After a string of quarterly losses, Freeport-McMoRan Inc. (NYSE:FCX) reported $245 million in profits for the third quarter of 2016, while revenue came in at $3.8 billion. Analysts have a neutral view on the stock with 13 out of the 22 analysts covering the stock rating it as a “Hold”. The company has been deleveraging its debt-laden balance sheet over the last year. It recently has announced that it would sell its oil and gas assets in California for $742 million. The Duquesne Family Office LLC held 4.87 million shares of this company valued at $52.7 million at the end of September. Another investor bullish on Freeport-McMoRan Inc. (NYSE:FCX).

Merck & Co., Inc. (NYSE:MRK) is a mega-cap healthcare pharmaceutical company, whose stock has grew by 17% since the beginning of the year and sports a dividend yield of nearly 3%. For the third quarter, Merck & Co., Inc. (NYSE:MRK) reported revenue of more than $10.54 billion, topping the estimates by $360 million, while EPS of $1.07 was higher than the expected $0.98. Duquesne Family Office inititated a new position in Merck & Co. Inc. (NYSE:MRK) during the third quarter and reported a $42.68 million stake containing 683,800 shares as of the end of September. Among the funds we track, the largest shareholder of Merck is Ken Fisher’s Fisher Asset Management, which held 6.82 million shares of the company at the end of the third quarter.

Activision Blizzard, Inc. (NASDAQ:ATVI), one of the largest developers of computer and mobile games, was also added to Duquesne Family Office’s equity portfolio in the third quarter as the stock advanced by 11.8%. According to its latest 13F, the fund currently owns 748,700 shares of the company worth $33.17 million. Most analysts have an overwhelmingly positive view of the stock, with 16 out of the 22 analysts covering the stock having set a “Buy” rating. Online gaming has a bright future as more and more people globally get connected to the Internet and spend an increasing amount of time online. The company is well positioned to leverage from this secular trend. Stephen Mandel’s Lone Pine Capital, Philippe Laffont’s Coatue Management, and Daniel S. Och’s OZ Management also ranked among the company’s shareholders at the end of September.

Druckenmiller’s fund initiated a stake in EOG Resources Inc. (NYSE:EOG) during the third quarter and held 270,300 shares valued at $26 million at the end of September. The company’s stock has gained 36% year-to-date. EOG Resources is engaged in oil & gas exploration and production, so it should benefit from Trump’s policies favouring the fossil fuel sector. EOG Resources Inc. (NYSE:EOG) has extensive oil and gas operations in USA, China, UK and Trinidad and Tobago. It’s main fields are located in USA which would benefit from the fiscal and monetary policies of the new Republican administration. Trump has said that he thinks climate change and global warming is a hoax and will heavily push investments into the oil and gas sector in USA. During the third quarter, Phill Gross and Robert Atchinson’s Adage Capital Partners boosted its exposure to EOG Resources Inc. (NYSE:EOG) by 70% to 958,300 shares.

Bank of America Corp. (NYSE:BAC)’s stock has registered a rally following the elections as it is expected that Donald Trump will dramatically lower the regulations and restrictions on the financial sector. The Dodd Frank Act may be repealed and large banks may be allowed greater freedom in conducting investment and trading operations. Bank of America Corp. (NYSE:BAC) is a universal bank and is present in all major financial sectors such as consumer banking, wealth management, investment banking etc. The company has a major presence in investment banking after it bought Merill Lynch after the Lehman crisis. Therefore, Druckenmiller made the right call to add Bank of America Corp. (NYSE:BAC) to its equity portfolio during the third quarter and reported ownership of 1.57 million shares worth $24.7 million in its latest 13F filing. Fisher Asset Management is another fund bullish on Bank of America, holding 35.75 million shares as of the end of September.

Disclosure: None