Stan Druckenmiller’s Duquesne Family Office LLC, previously Duquesne Capital, has filed its 13F for the reporting period of March 31. Druckenmiller founded Duquesne Capital in 1981 but closed the fund to outside investors in 2010 after not being able to deliver higher returns to his clients. The investment manager had nearly $12 billion in assets at the time of closing his fund. Duquesne Family Office LLC’s public equity portfolio stands at $786.99 million as of the reporting period, with Illumina, Inc. (NASDAQ:ILMN) and Biogen Inc (NASDAQ:BIIB) holding down the top two spots in the portfolio. Druckenmiller has positions in numerous small-cap stocks, which we will discuss in this article, with the leaders being bluebird bio Inc (NASDAQ:BLUE), Nektar Therapeutics (NASDAQ:NKTR), Banco Macro SA (ADR) (NYSE:BMA), and Mattress Firm Holding Corp (NASDAQ:MFRM).
Most investors can’t outperform the stock market by individually picking stocks because stock returns aren’t evenly distributed. A randomly picked stock has only a 35% to 45% chance (depending on the investment horizon) to outperform the market. There are a few exceptions, one of which is when it comes to purchases made by corporate insiders. Academic research has shown that certain insider purchases historically outperformed the market by an average of seven percentage points per year. This effect is more pronounced in small-cap stocks. Another exception is the small-cap stock picks of hedge funds. Our research has shown that the 15 most popular small-cap stocks among hedge funds outperformed the market by nearly a percentage point per month between 1999 and 2012. We have been forward testing the performance of these stock picks since the end of August 2012 and they have returned more than 144% over the ensuing 32 months, outperforming the S&P 500 Index by nearly 85 percentage points (read the details here). The trick is focusing only on the best small-cap stock picks of funds, not their large-cap stock picks which are extensively covered by analysts and followed by almost everybody.
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With 184,082 shares valued at $22.23 million, bluebird bio Inc (NASDAQ:BLUE) is the largest small-cap stock holding of Druckenmiller. The shares of the biotechnology company have been on a tear in 2015, more than doubling, with year-to-date returns of 109.42%. In fact it’s appreciated so much in the last few days that it’s no longer technically a small-cap stock, though it was as of March 31. The company’s shares picked up after it reported that it would announce clinical results for the current ongoing phase study of LentiGlobin on June 13, 2015. A brief abstract presented by the company did give positive hints about the effect of LentiGlobin in sickle cell disease and beta-thalassemia. Israel Englander‘s Millennium Management and James Flynn’s Deerfield Management hold large positions in bluebird bio Inc (NASDAQ:BLUE).
Nektar Therapeutics (NASDAQ:NKTR) is the second-largest small-cap pick of Duquesne Capital with the fund owning 655,000 shares valued at $7.21 million. The biopharmaceutical company has a market cap of $1.50 billion and its shares trade at a current P/E ratio of 66.60. However, the shares of the biotechnology firm have declined 24.8% in the current year. The clinical-stage biopharmaceutical company reported extraordinary revenue growth in the first quarter of 2015, coinciding with the sale of Movantik in the U.S for the first time. Nektar Therapeutics (NASDAQ:NKTR) reported quarterly revenue of $108.8 million against a revenue of $19.8 million in the first quarter of 2014. Millennium Management and D E Shaw are among the primary investors of Nektar Therapeutics (NASDAQ:NKTR).