Billionaire Stanley Druckenmiller founded his Duquesne Capital hedge fund in 1981. It now has some $10 billion in assets under management. Previously, Druckenmiller managed money for George Soros from 1988 to 2000, and was the lead portfolio manager for Soros’ famous Quantum Fund. Outlined below are Druckenmiller’s top five stocks going into the second quarter, let’s check them out (see Druckenmiller’s selloffs).
Housing bets
Druckenmiller’s top stock pick is Lennar Corporation (NYSE:LEN), which makes up 8% of the hedge fund’s portfolio. Lennar is one of the largest U.S. home builders, with a focus on moderately priced homes. Lennar posted EPS of $0.26, versus $0.08 during the first quarter, on the back of a 37% revenue rise; the stock is now up over 55% for the past twelve months.
Revenues are expecte to be up some 33% in fiscal 2013, after a 33% rise in fiscal 2012. The real thesis for the expected revenue growth is an assumed continued recovery in housing. Lennar Corporation (NYSE:LEN) also has a strong positioning in southeast Florida, which is expected to grow at a quicker pace than the overall market. Lennar Corporation (NYSE:LEN) also appears to be trading relatively cheaply at only 11.5 times earnings, whereas the likes of NVR and M/I Homes trade in excess of 25 times earnings.
Druckenmiller’s third-largest holding is another homebuilder, D.R. Horton, Inc. (NYSE:DHI), and makes up 5.8% of his portfolio. Much like Lennar Corporation (NYSE:LEN), D.R. Horton, Inc. (NYSE:DHI) also posted robust EPS results last quarter, with EPS coming in at $0.32, compared to $0.13 for the same quarter last year. This comes as homebuilding revenue was up 49% and the number of homes closed was up 33%.
The future looks bright for D.R. Horton, Inc. (NYSE:DHI), coupling the continued housing recovery and the company’s contract backlog of $1.7 billion. D.R. Horton, Inc. (NYSE:DHI) also has a strong balance sheet, with over $1 billion in cash and marketable securities, which should allow the company to make strategic land acquisitions going forward.
Pharma plays
Druckenmiller’s number-two stock pick is Pfizer Inc. (NYSE:PFE) , which makes up 6.8% of the hedge fund’s portfolio. In February, Pfizer completed the IPO of 20% of its Zoetis animal health unit. Late last month, Pfizer announced plans to split off its remaining 80% interest, allowing shareholders to exchange all, some, or none of their Pfizer Inc. (NYSE:PFE) common shares for Zoetis shares. The move is expected to allow Pfizer Inc. (NYSE:PFE) to refocus on its higher-margin drug business.
Revenues for 2013 are expected to see a downfall due to ongoing generic erosion in off-patent Lipitor, Detrol and Xalatan. Yet, the company should see strength from its Lyrica muscle pain therapy (Pfizer Inc. (NYSE:PFE)’s largest-selling drug), and new oncology agents that include Sutent.
