In this article, we discuss the 10 stocks that Stanley Druckenmiller is selling. If you want to skip our detailed analysis of these stocks, go directly to Stanley Druckenmiller is Selling These 5 Stocks.
Stanley Druckenmiller oversees Duquesne Capital, a hedge with a portfolio value of more than $3 billion at the end of the third quarter of 2021 with the top ten holdings comprising 72% of the portfolio. The top investments of the fund are concentrated in the technology and basic materials sector, a somewhat unconventional combo. According to the latest filings, the fund sold out of 14 stocks, made new purchases in 14, additional purchases in 9, and reduced holdings in 19 equities between June and September this year.
Druckenmiller rose to prominence in the finance world after partnering with legendary investor George Soros to short the British pound in the early 1990s, making billions in the process. He is also famous for never having a losing year on record between 1981 and 2010, just before he converted the fund into a family office. The investor has a net worth of $6.8 billion and is placed 138 on the list of 400 richest Americans maintained by news publication Forbes.
Some of the top stocks in the portfolio of Duquesne Capital at the end of September included Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG), among others discussed in detail below.
Our Methodology
These were picked from the investment portfolio of Duquesne Capital at the end of the third quarter of 2021. The stocks in which the fund decreased stake by 40% or more, compared to filings for the second quarter, were preferred.
The hedge fund sentiment around each stock was calculated using the data of 873 hedge funds tracked by Insider Monkey.
Stanley Druckenmiller is Selling These Stocks
10. Smartsheet Inc. (NYSE:SMAR)
Number of Hedge Fund Holders: 49
Percentage Decrease in Stake During Q3: 87%
Smartsheet Inc. (NYSE:SMAR) owns and runs a cloud-based platform for work productivity. At the end of the third quarter of 2021, Duquesne Capital owned 64,709 shares in the company worth $4.4 million, representing 0.14% of the portfolio.
In September, BMO Capital analyst Keith Bachman had raised the price target on Smartsheet Inc. (NYSE:SMAR) stock to $90 from $78 and kept an Outperform rating, appreciating the strong quarterly earnings results of the firm.
At the end of the second quarter of 2021, 49 hedge funds in the database of Insider Monkey held stakes worth $1.48 billion in Smartsheet Inc. (NYSE:SMAR), up from 39 in the preceding quarter worth $1.49 billion.
Alongside Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG), Smartsheet Inc. (NYSE:SMAR) is one of the stocks attracting the attention of elite investors.
9. Teck Resources Limited (NYSE:TECK)
Number of Hedge Fund Holders: 40
Percentage Decrease in Stake During Q3: 73%
Teck Resources Limited (NYSE:TECK) is a diversified metals and mining firm. The company recently posted earnings for the third quarter, reporting earnings per share of C$1.88, beating estimates by C$0.39. The revenue over the period was C$3.9 billion, up 73% year-on-year.
Duquesne Capital owned 1 million shares in Teck Resources Limited (NYSE:TECK) at the end of September 2021 worth $26 million, representing 0.84% of the portfolio.
Among the hedge funds being tracked by Insider Monkey, United Kingdom-based investment firm Contrarius Investment Management is a leading shareholder in Teck Resources Limited (NYSE:TECK) with 7.3 million shares worth more than $170 million.
8. Carvana Co. (NYSE:CVNA)
Number of Hedge Fund Holders: 63
Percentage Decrease in Stake During Q3: 63%
Carvana Co. (NYSE:CVNA) owns and runs an ecommerce platform for used cars. Securities filings show that Duquesne Capital owned 137,237 shares in the company at the end of the third quarter of 2021 worth $41 million, representing 1.34% of the portfolio.
On November 5, investment advisory Needham maintained a Buy rating on Carvana Co. (NYSE:CVNA) stock with a price target of $378, noting that there was confidence in the shares to gain in the used car industry but cautioning against higher expenses.
At the end of the second quarter of 2021, 63 hedge funds in the database of Insider Monkey held stakes worth $8.9 billion in Carvana Co. (NYSE:CVNA), up from 64 in the preceding quarter worth $7.5 billion.
In its Q1 2021 investor letter, Steel City Capital LP, an asset management firm, highlighted a few stocks and Carvana Co. (NYSE:CVNA) was one of them. Here is what the fund said:
“Carvana’s (CVNA) 4Q’20 results weren’t particularly great. EBITDA was negative ($70) million, a stark turnaround on a sequential basis from a first-ever EBITDA profit of $21 million in 3Q’20. The culprit was a steep drop off in retail unit GPU ($1,265 vs. $1,857) and wholesale unit GPU ($358 vs. $1,113) as some of the COVID-driven aberrations in the used car market began to abate.
The company’s presentation of EBITDA (calculated “bottom up”) is dubious, as it commingles non-operating items including mark-to-market changes in its retained securitization portfolio. With the exception of 1Q’20, when ABS markets were going haywire, this line item provided a tailwind throughout 2020, including a gain of $5 million in 4Q’20. Also on the non-operating self-help front, management released a reserve for vehicle service contract cancellations in 4Q’20, adding another $7 million to EBITDA, and boosting “Other” GPU by $96.
Putting it all together, I put operating EBITDA closer to negative ($82) million vs. the $70 million printed by the company. This is a larger loss than 4Q’19 (calculated on a similar operating basis) despite the company selling 43% more retail units y/y!
Management didn’t provide formal guidance for 2021, but did offer guardrails for how to think about the year. Retail unit growth is expected to accelerate from last year’s 37%, with total revenue tracking in-line with retail unit growth. Total revenue per retail unit was $22,885 last year, meaning the company thinks it can hold this metric relatively flat throughout the year. Management also noted it expects some softening in retail ASPs throughout the year (“I think the gains that we saw in ASP in the back half of the year, we expect to moderate a little bit in 20216 “), with the implication being “Other” revenue – including financing – will serve as an offset.
Why look at total revenue per retail unit? The company guides to total GPU, which itself is an apples-and-oranges mix of total gross profit divided by only retail units. As for total GPU, management called out expectations for “mid- $3,000s” in FY21. Putting the pieces together, $3,500 of total GPU divided by $22,885 of total revenue per retail unit implies gross margin of 15.3% for the year, roughly 100 bps of pickup vs. last year’s 14.2%.
On the EBITDA front, management guided to continuing cost leverage but still a “small EBITDA margin loss” in FY’21. Splitting the difference between last year’s negative 4.6% EBITDA margin and breakeven gives us something in the realm of a 2.5% EBITDA margin loss for FY’21. So, 200 bps of total improvement, 100 bps of which we know is coming from GPU margin. The other 100 bps, therefore, must come from SG&A.
Applying a negative 2.5% margin to $22,885 of total revenue per retail unit implies about $575 of negative EBITDA per unit sold. This also allows us to back into implied cash SG&A per unit of $4,075, which is 17.8%, and 100 bps better than last year’s 18.8%.
The unknown variable is what retail unit growth actually looks like in 2021. All we know is it’s going to “accelerate” vs. last year’s 37%. Doing some back of the envelope sensitivity implies negative EBITDA ranging from a ($210) million loss at 50% unit growth to a ($250) million loss at 80% growth (A classic case of “We lose money on every sale but make up for it in volume!”). For context, the street is currently forecasting a negative EBITDA margin of 1.0% and negative EBITDA of ($87.5) million.
I think one of the big risks to the company’s outlook isn’t necessarily on the volume front – I believe management when they say they can’t keep pace with demand – but instead on the GPU front. Before 2H’20, only once in the prior 14 quarters did total GPU exceed $3,000. 3Q’20 reached an all-time high due to strong vehicle pricing and strong finance gross profit, while 4Q’20 got its boost from finance gross profit and the abovementioned reserve release. Finance GPU is a function of both absolute interest rates and ABS spreads, and the trajectory of absolute rates since the beginning of 2021 calls into question the company’s ability to maintain finance GPU at $1,400, let alone grow it.”
7. Moderna, Inc. (NASDAQ:MRNA)
Number of Hedge Fund Holders: 37
Percentage Decrease in Stake During Q3: 62%
Moderna, Inc. (NASDAQ:MRNA) is a biotech firm that makes vaccines for infectious diseases. The stock has rallied in the past few days after regulatory authorities in the US approved the use of COVID-19 booster shots developed by the firm for all adults.
According to the latest data, Duquesne Capital owned 85,971 shares in Moderna, Inc. (NASDAQ:MRNA) at the end of September 2021 worth $33 million, representing less than 1.07% of the portfolio of the fund.
At the end of the second quarter of 2021, 37 hedge funds in the database of Insider Monkey held stakes worth $5.7 billion in Moderna, Inc. (NASDAQ:MRNA), down from 39 in the preceding quarter worth $1.6 billion.
In its Q2 2021 investor letter, Baillie Gifford, an asset management firm, highlighted a few stocks and Moderna, Inc. (NASDAQ:MRNA) was one of them. Here is what the fund said:
“Among the top contributors to Fund performance in the second quarter was Moderna. Moderna has just reported its first profitable quarter in the company’s history – net income for the most recent quarter was $1.2 billion. It reported revenue of $1.9 billion, an impressive increase compared to $8 million a year ago, driven by the sales of its Covid-19 vaccine. Moderna is expecting to deliver up to 1 billion vaccine doses in 2021 and is in discussions to increase global supply to governments around the world. Our long-term focus remains on the transformational potential of Moderna’s technology and its ability to address different diseases.”
6. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders: 266
Percentage Decrease in Stake During Q3: 62%
Meta Platforms, Inc. (NASDAQ:FB) operates as an interactive media and services firm. Regulatory filings show that Duquesne Capital owned 105,883 shares in the company at the end of the third quarter of 2021 worth over $35 million, representing 1.16% of the portfolio.
Truist analyst Youssef Squali has a Buy rating on Meta Platforms, Inc. (NASDAQ:FB) stock with a price target of $400. The analyst underlined in an investor note that the “scale” of the firm showed resilience in the face of industry challenges.
At the end of the second quarter of 2021, 266 hedge funds in the database of Insider Monkey held stakes worth $42 billion in Meta Platforms, Inc. (NASDAQ:FB), up from 257 in the preceding quarter worth $40 billion.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:FB) is one of the stocks on the radar of growth investors.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Meta Platforms, Inc. (NASDAQ:FB) was one of them. Here is what the fund said:
“We continued to keep our learnings from 2020 in mind during the quarter as we sought to increase the up capture of the portfolio. We also made adjustments to the portfolio’s top 10 holdings to increase the participation of select stocks, including Facebook, while trimming our weighting to stable names, which now represent 47% of the portfolio. Our repositioning has been encouraging so far with the portfolio performing better on up days in the market while maintaining good down capture during more turbulent sessions.”
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Disclosure. None. Stanley Druckenmiller is Selling These 10 Stocks is originally published on Insider Monkey.
