In this article we present the list of 10 Stocks That Have Grabbed Stanley Druckenmiller’s Attention in 2022.
Teck Resources Ltd (USA) (NYSE:TECK), Pioneer Natural Resources Company (NYSE:PXD), and Coterra Energy Inc. (NYSE:CTRA) are three energy stocks that have grabbed hedge fund titan Stanley Druckenmiller’s complete attention in 2022.
Stanley Druckenmiller is a legend in the investing world with a peerless record. Druckenmiller launched Duquesne Capital in 1981 and built such a sterling reputation that he was recruited by hedge fund legend George Soros in 1988. While Soros gets the bulk of the credit for his firm’s legendary bet against the British Pound in 1992 that banked over $1 billion, it was Druckenmiller’s idea all the way.
Druckenmiller eventually struck out on his own again in 2000 and over the following decade built Duquesne Capital to a peak of over $12 billion in assets under management. He converted Duquesne into a family office in 2010, citing the stress of maintaining his incredible track record of success, and continues to run it to this day.
Druckenmiller’s track record as a money manager during his four decade run is unmatched. The billionaire has never had a down year (not even the financial crisis of 2008 could stop him from posting double digit returns), and enjoyed a stretch of 30 consecutive years during which he compounded assets at a 30%+ rate.
Stan Druckenmiller
Druckenmiller was critical of Fed policy last year and has reiterated that stance this year, claiming that because of those inappropriate measures, investors will now pay the price. At the Sohn Investment Conference earlier this month, Druckenmiller stated that we’re six months into a bear market which likely has plenty of run left in it, with Druckenmiller predicting a recession will hit at some point next year.
With that ominous backdrop in mind, let’s take a look at ten stocks that nonetheless captured the attention of Stanley Druckenmiller in the first quarter of 2022. There was a sizable shakeup in his family office’s 13F portfolio during the quarter, as it cut its exposure to consumer discretionary stocks by over 13 percentage points, while making a big investment in energy stocks (exposure up over 10 percentage points). Druckenmiller’s firm now has more exposure to energy stocks (13.78%) than it’s had since the final quarter of 2017.
Read on to find out which stocks Druckenmiller is betting big on as we head deeper into 2022.
Our Methodology
The following data is gathered from Duquesne Capital’s latest 13F filing with the SEC. We follow hedge funds like Duquesne Capital because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q1 2022 reporting period.
10 Stocks That Have Grabbed Stanley Druckenmiller’s Attention in 2022
10. Antero Resources Corp (NYSE:AR)
Value of Duquesne Capital’s 13F Position: $15 million
Number of Hedge Fund Shareholders (as of March 31): 53
Teck Resources Ltd (USA) (NYSE:TECK), Pioneer Natural Resources Company (NYSE:PXD), and Coterra Energy Inc. (NYSE:CTRA) aren’t the only energy stocks that captured the attention of Stanley Druckenmiller during the first quarter. Antero Resources Corp (NYSE:AR) also landed in his crosshairs, as the money manager built a new stake in AR consisting of 491,800 shares.
Antero Resources Corp was a popular buy among hedge funds last quarter, as it had been for the prior two quarters as well, as hedge fund ownership of AR has jumped by 61% over the past three quarters.
Antero Resources Corp had a strong first quarter, buoyed by the highest quarterly NGL price the company has ever enjoyed. Adjusted earnings per share hit $1.15 during the quarter, topping estimates. Revenue from natural gas sales rose to $996 million, up 38% year-over-year, while natural gas liquids sales rose by 50% to $660 million.
9. The New York Times Company (NYSE:NYT)
Value of Duquesne Capital’s 13F Position: $18.8 million
Number of Hedge Fund Shareholders (as of March 31): 38
Druckenmiller’s Duquesne Capital also added The New York Times Company (NYSE:NYT) to its 13F portfolio during Q1, buying 409,325 shares of the publishing giant. That was in stark contrast to the overall hedge fund industry, as there was a 16% dip in ownership of NYT even when accounting for Druckenmiller’s purchase.
The New York Times Company has become a much more modern and profitable enterprise in recent years. Digital subscriptions more than doubled between 2018 and 2021, leading to digital revenue surpassing print revenue in 2020. The shift to more digital customers and fewer print ones (though print subscriptions have doggedly hung in there over the past decade) has allowed the NYT to generate far more profit from its content, with its EBIT margin rising by 11 percentage points since 2016, to 14%.
Shares of The New York Times Company have pulled back considerably this year, down by 39% to stand barely above their 2018 peaks, when the company had half the digital subscribers it does now, so it seems like a sensible time to invest in the iconic news brand, as Druckenmiller has done.
8. Global-e Online Ltd. (NASDAQ:GLBE)
Value of Duquesne Capital’s 13F Position: $19.4 million
Number of Hedge Fund Shareholders (as of March 31): 26
Global-e Online Ltd. (NASDAQ:GLBE) represents yet another diverse purchase made by Druckenmiller during Q1. The hedge fund manager couldn’t resist snapping up 575,630 shares of the e-commerce company, whose shares have been battered amidst fears of a looming recession. GLBE also featured in Cathie Wood’s Latest Portfolio: 10 New Stock Picks in 2022.
Global-e Online Ltd. shares have lost 66% of their value this year despite a strong first quarter for the company during which its organic GMV rose by an identical 66%. The company did cut its guidance for the remainder of the year, citing multiple near-term headwinds, and investors are concerned about how ecommerce companies will fare with Covid re-openings picking up steam, which has weighed heavily on the stock.
For investors with a longer-term outlook, GLBE could be a great buy-low candidate, boasting multiple catalysts that should keep its growth well above that of the broader e-commerce industry for several years.
The Artisan Mid Cap Fund recently added to its Global-e Online Ltd. holding and had this to say about the company in its Q4 2021 investor letter:
“We added to several positions during the quarter including Global-e online. Global-e online is a global e-commerce service platform enabling cross-border transactions across 200+ countries. It provides three critical elements: website localization, payments and logistics. For background, ~30% of a global brand’s online traffic is from international shoppers, though the portion of its international sales is no more than 5%-10% as brands struggle to overcome numerous cross-border challenges—different languages, currencies, payment methods, duties/taxes and shipping providers. There is no one-size-fits-all solution as each market is unique; hence, merchants of all sizes find a do-it-yourself cross-border strategy to be complex, costly and difficult to maintain. In our view, the capability of Global-e online’s platform to remove these frictions was recently validated by its strategic partnership with e-commerce platform giant Shopify, which also made an equity investment in the company. With strong current performance and the potential for accelerated growth once Global-e completes its technological integration with Shopify’s platform, we added to our GardenSM position.”
7. Workday, Inc. (NYSE:WDAY)
Value of Duquesne Capital’s 13F Position: $19.8 million
Number of Hedge Fund Shareholders (as of March 31): 87
Druckenmiller also built a new Q1 stake of 82,500 shares in Workday, Inc. (NYSE:WDAY), a provider of employee management and financial services software. He wasn’t the only one with a keen interest in Workday, as there was a 16% jump in hedge fund ownership of the stock during the quarter, which propelled Workday onto the list of the 30 Most Popular Stocks Among Hedge Funds: 2022 Q1 Rankings for the first time.
Workday, Inc. became profitable on a quarterly diluted EPS basis for the first time in 2021, doing so twice, which helped push the stock to record highs. Profitability has sagged in recent quarters however, with Workday recording an operating loss of $72.8 million in the first quarter of its fiscal 2023.
On other hand, Workday, Inc.’s revenue growth remains strong at 22% during the latest quarter, hitting $1.43 billion despite several big deals actually being pushed back until later in the year. As a result, Workday was able to push its full-year revenue guidance up by another 22% to between $5.54 billion and $5.56 billion. With shares crumbling by over 50% since November, WDAY now trades around record lows in terms of its P/S ratio (now less than 7X), making it look like a reasonable long-term investment.
6. Zendesk Inc (NYSE:ZEN)
Value of Duquesne Capital’s 13F Position: $20.2 million
Number of Hedge Fund Shareholders (as of March 31): 66
We finish up the first half of the list with another software provider, Zendesk Inc (NYSE:ZEN), which operates a cloud-based customer service platform. Duquesne Capital built a new position of 167,660 ZEN shares during the quarter, a stake worth just over $20 million. ZEN was equally as popular as WDAY among hedge funds during Q1, as there was a 16% rise in ownership of it.
Druckenmiller and other eager hedge fund managers may have been interested in seeing Zendesk Inc get acquired by a larger tech company, which appeared to be a realistic possibility. There were even suggestions that a bidding war could ensue between multiple bidders. Ultimately, that never materialized, as the company wrapped up its strategic review without receiving an actionable proposal.
While Zendesk Inc has made several missteps in recent months that have irked investors, including Barry Rosenstein’s JANA Partners, which counts ZEN as its top stock pick, the company’s fundamentals are strong. It grew revenue by 30% last year to $1.34 billion and expects growth to be between 26% and 28% this year. Its gross margin also hit 83% in the first quarter of this year, compared to 79% in 2020, as it continues to benefit from improved scale and efficiency.
Teck Resources Ltd (USA) (NYSE:TECK), Pioneer Natural Resources Company (NYSE:PXD), and Coterra Energy Inc. (NYSE:CTRA) are a few of the other stocks that Stanley Druckenmiller was buying during Q1. Check out the full list in the second part of this article, linked to below.
5. Cenovus Energy Inc (NYSE:CVE)
Value of Duquesne Capital’s 13F Position: $24 million
Number of Hedge Fund Shareholders (as of March 31): 47
Cenovus Energy Inc (NYSE:CVE) is the first of three energy stocks to appear on the second half of this list, as Stanley Druckenmiller built a new position of 1.44 million shares in the Canadian oil company. Hedge funds have been paying serious attention to Cenovus is recent quarters, as it hit record levels of ownership among hedge funds for the second straight quarter during Q1.
Cenovus Energy Inc just wrapped up a deal with BP p.l.c. (NYSE:BP) that will see the two companies swap their stakes in two different Canadian-based energy projects. Cenovus takes over BP’s 50% stake in the Sunrise oilsands project, while BP gets $600 million in cash, a future variable payment worth up to $600 million, and takes on Cenovus’ 35% stake in the undeveloped Bay du Nord offshore drilling project. The deal better leverages both sides’ expertise and gives Cenovus full ownership of the Sunrise project, which it’s been operating since early 2021. The firm plans to increase capacity at the site by 20% to 60,000 barrels per day.
Cenovus Energy Inc was a key contributor to the L1 Capital Long Short Fund Limited’s prospects in 2021. Here is what the fund had to say about its position in Cenovus Energy Inc. in its Q4 2021 investor letter:
“Detailed, bottom-up stock research remains the investment team’s primary focus and the core driver of portfolio performance. 2021 once again demonstrated the team’s ability to identify ‘winners’ through extensive company and industry research across a diverse range of sectors. Key contributors included Cenovus Energy, (due to) recovering oil price leading to improved investor sentiment, consensus earnings upgrades and strong free cashflow generation.”
4. The PNC Financial Services Group Inc. (NYSE:PNC)
Value of Duquesne Capital’s 13F Position: $31.1 million
Number of Hedge Fund Shareholders (as of March 31): 49
The PNC Financial Services Group Inc. (NYSE:PNC) is the only non-energy stock to feature among Druckenmiller’s five biggest buys of the quarter. Druckenmiller’s fund built a new position of 168,726 PNC shares during the quarter, making it the fund’s 16th-largest long position. Fellow billionaire Steve Cohen also added PNC to his hedge fund’s 13F portfolio during Q1.
The PNC Financial Services Group Inc. missed revenue estimates in Q1, pulling in $4.69 billion against expectations of $4.76 billion. The investment bank’s adjusted EPS topped estimates by $0.56 however, coming in at $3.29, thanks in part to greatly limiting noninterest expenses. PNC’s loans increased by 1% quarter-over-quarter during the period, while investment securities grew by 5%.
The PNC Financial Services Group Inc. was so confident in its quarterly performance that it made a substantial 20% raise to its dividend payments, which now pay out $1.50 quarterly and yield over 3%. The company also bought back $1.2 billion worth of its shares during the first quarter.
3. Pioneer Natural Resources Company (NYSE:PXD)
Value of Duquesne Capital’s 13F Position: $32.6 million
Number of Hedge Fund Shareholders (as of March 31): 51
130,375 shares of Pioneer Natural Resources Company, which have gained 38% this year, were added to Duquesne Capital’s portfolio during Q1. There was a 24% increase in hedge fund ownership of the stock during the quarter.
Pioneer Natural Resources Company returned $2 billion to shareholders following its strong Q1 results, paying out a variable dividend of $6.60 per share on top of its fixed quarterly payments of $0.78. That amounted to an impressive 13% dividend yield on an annualized basis. Pioneer has the potential to return some serious cash to shareholders in the coming years thanks to its pristine balance sheet and strong margins.
The Clearbridge Investments Mid Cap Growth Strategy likes Pioneer Natural Resources Company’s long-term potential even should energy prices decline, having this to say about the company in its Q1 2022 investor letter:
“Our underweight to the energy sector weighed on performance, as energy prices skyrocketed from inflationary pressures and the threat of reduced supply. We have a limited footprint within the sector but continue to look for companies that will generate strong, long-term returns such as Pioneer Natural Resources. Pioneer is an oil and gas exploration and production company that offers a combination of a strong asset base, quality balance sheet and compelling free cash flow yield at current commodity prices. We believe Pioneer has strong underlying drivers that will generate attractive risk-adjusted returns beyond shorter-term fluctuations in energy prices.”
2. Coterra Energy Inc. (NYSE:CTRA)
Value of Duquesne Capital’s 13F Position: $47.9 million
Number of Hedge Fund Shareholders (as of March 31): 40
Coterra Energy Inc., shares of which have been red-hot this year, was also added to Druckenmiller’s growing stable of energy holdings during Q1. The billionaire money manager’s fund bought 1.78 million shares of the stock during the quarter, which ranked as its 11th-largest long position on March 31.
Coterra Energy Inc. shares are still up by 46% this year despite sagging by 20% over the past week or so as natural gas prices have tumbled from highs not seen since the financial crisis. Nonetheless, natural gas prices are still more than twice as high as they were at the start of the year, which is a tremendous boon for Coterra, as 87% of the company’s production is either natural gas or natural gas liquids.
Like Pioneer, Coterra Energy Inc. also returned a significant amount of cash to shareholders following its Q1 results, over $660 million in total. The company also raised its full-year free cash flow guidance by 50% to $4.5 billion, so shareholders like Druckenmiller can expect even greater payouts in the quarters to come.
1. Teck Resources Ltd (USA) (NYSE:TECK)
Value of Duquesne Capital’s 13F Position: $97.8 million
Number of Hedge Fund Shareholders (as of March 31): 57
Druckenmiller saved his biggest new investment for Teck Resources Ltd (USA) (NYSE:TECK), building a stake that was valued at more than twice that of the next largest new investment. Teck Resources was one of the most popular buys among hedge fund managers in Q1, as ownership of the stock jumped by 39%.
Teck Resources Ltd (USA) (NYSE:TECK) is in a great position to capitalize on what is expected to be robust demand for copper in the coming decades. Copper demand is expected to rise by anywhere from 18%-28% over the next decade, and by as much as 100% by 2050. Meanwhile, copper production is actually expected to decline over the next decade, even when factoring in probable new projects. That could quickly change however, as a supply glut in 2021 appears to have corrected into what analysts are projecting to be a slight oversupply this year and a further oversupply next year.
Nonetheless, there’s tremendous potential for a company like Teck Resources Ltd (USA) (NYSE:TECK), which has developed a robust pipeline of copper projects thanks to its two decades of investment in exploration and M&A activity, to meet the growing demand for copper in the years and decades to come.
For more on the latest trades made by hedge fund titan Stanley Druckenmiller, check out Stanley Druckenmiller Was Right About These 9 Stocks and Billionaire Stanley Druckenmiller’s 2022 Portfolio: 10 Value Stock Picks.
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This article is originally published at Insider Monkey.
