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Druckenmiller’s 4Q13 Portfolio Changes

Stan Druckenmiller is a billionaire, and was the long-time manager of Duquesne Capital. Now, he oversees a family office, but his investing strategy is mostly the same. Here are some things we noticed when comparing Druckenmiller’s filing for the end of December with previous filings:

DUQUESNE CAPITAL

New buys in big pharma. One of the more striking themes from Druckenmiller’s 4Q13 13F filing was an increased bet on drug manufacturers. He initiated new positions in two branded drug manufacturers, Bristol-Myers Squibb (BMY) and AstraZeneca (AZN) as well as a generic specialist with a growing branded business, Teva Pharmaceutical Industries (TEVA). At the same time, he increased his stake in Johnson & Johnson (JNJ) by 82%. With each company having different drugs in various stages of development, these stakes could be a diversified bet on one or more new blockbuster drugs getting one step closer to receiving FDA approval or a more defensive portfolio posture following the strong market rally in 2013.

Fedex. Druckenmiller initiated a new position in shipping company Fedex (FDX), which became his second largest holding. Although customers have been opting for cheaper delivery options vs. FDX’s express shipping service, the seasonally strong holiday season and benefits from recent restructuring efforts could have been reason enough to buy this stock during 4Q.

Wireless towers. Another new theme was Druckenmiller’s new positions in wireless communication tower operators Crown Castle International (CCI) and SBA Communications (SBAC). This seems to be a bet that, following American Tower’s (AMT) conversion to a REIT, competitors will follow suit. Subsequently, CCI announced in early January that it will operate as a REIT effective January 1, 2014.

Still bullish on tech. Continuing a theme from the previous quarter, Druckenmiller remains bullish on two tech heavyweights, Google (GOOG) and Amazon (AMZN). He increased his position in GOOG, which rallied 28% in 4Q13, by 4% and cemented its status as his top holding, accounting for whopping 17.4% of his portfolio. Similarly, AMZN, a newly initiated position during 3Q13 that also returned 28% in 4Q13, maintained its fourth place ranking in the portfolio. Although both companies are leaders in their respective fields, AMZN’s valuation multiples are clearly higher, given investor expectations that its continued dominance in online retailing will eventually lead to lower spending and higher profitability. On the other hand, GOOG is already highly profitable, which is reflected in its estimates and, hence, its more reasonable valuation levels.

Energy. Another theme that continued from 3Q13 was a bullish bet on oil and gas, with Druckenmiller increasing his exposure to oilfield services provider Halliburton (HAL) by 30% and independent exploration and production company Pioneer Natural Resources (PXD) by 38%, while maintaining Schlumberger (SLB) as his top two holding. In addition, he initiated new positions in two refiners, Valero Energy (VLO) and Marathon Petroleum (MPC), as well as another oilfield services company, Baker Hughes (BHI). On a related note, Druckenmiller seems to be making a bullish bet on another commodity, aluminum, via its new purchase of Alcoa (AA).

Sales. Druckenmiller sold out his entire stakes in Nokia (NOK) and Herbalife (HLF) during 4Q, which was a bit surprising as both names were new purchases during 3Q. However, given the 25% / 13% rally in NOK / HLF, respectively, during the quarter, it is safe to assume Druckenmiller made a tidy profit on these stocks.

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