Billionaire Stanley Druckenmiller is among the few titans on Wall Street who saw the opportunity to short China as early as 2013, well ahead of his peers and the rest of the market. Considering that Chinese equity markets have plummeted heavily this year, it won’t be a surprise if Mr. Druckenmiller’s Duquesne Family Office (formerly Duquesne Capital) reaps large profits from whatever short positions it has (which are not disclosed in filings). However, the performance of the family office’s long positions has been rather subdued this year. Analysis done by Insider Monkey of Duquesne Family Office’s 13F holdings in companies worth at least $1 billion shows that the 12 long positions held by the firm as of December 31 delivered a weighted average return of 0.3% during the first quarter. In this post, we will be go through the top five stock picks of the firm as of the end of 2015 and analyze their performance so far this year.
We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).
#5 Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP)
– Shares Owned by Duquesne Family Office (as of December 31): 772,300
– Value of Holding (as of December 31): $35.78 million
Ctrip.com is a Chinese stock that Mr. Druckenmiller likes, despite his bearish view on the country’s overall economic health. Duquesne Family Office increased its stake in Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) by 61% during the fourth quarter. However, like most other Chinese stocks, shares of Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) are trading in the red this year, with a year-to-date decline of nearly 4%. On March 16, the company reported its fourth quarter earnings, declaring EPS of $0.11 on revenue of $440 million, topping analysts’ expectations of loss of $0.05 per share on revenue of $430 million. Most analysts who cover the stock currently are bullish on it, citing the growth in China’s travel market and the economic policy shift in the country. However, some analysts are also concerned about the high level of debt on the company’s balance sheet and large operating losses at its subsidiary Qunar. Kenneth Tropin‘s Graham Capital Management increased its stake in Ctrip.com International, Ltd. by 31% to 15 million shares during the fourth quarter and was the largest shareholder of the company in our database at the end of 2015.
#4 Raytheon Company (NYSE:RTN)
– Shares Owned by Duquesne Family Office (as of December 31): 417,800
– Value of Holding (as of December 31): $52.03 million
Raytheon Company (NYSE:RTN) was a new addition to Duquesne Family Office’s equity portfolio during the fourth quarter. Raytheon Company (NYSE:RTN)’s stock has largely been range-bound this year and is currently up by 3.64% year-to-date. The defense company faced a minor setback in December after the Pentagon announced that it will look for other options if the performance of the company’s ground control system for GPS satellites fails to improve. On April 13, U.S. Deputy Secretary of Defense Robert Work stated that more data is needed in order for him to be confident in the completion of the company’s delayed project. On the same day, Raytheon received a contract worth $1 billion from the U.S. Navy to develop 15 new jammers for EA-18G Growler aircraft. Analysts who track the company have appreciated its acquisitions in the intelligence and cyber warfare spaces and believe that it will continue to deliver stellar returns to shareholders through a combination of EPS growth and its long-term share repurchase program. Andrew Sandler‘s Sandler Capital Management initiated a stake in Raytheon Company during the fourth quarter, purchasing 119,500 shares of the company.
The performance of Mr. Druckenmiller’s top three equity holdings is discussed on the next page.