Billionaire Stanley Druckenmiller founded the asset manager Duquesne Capital in 1981. He closed the fund in 2010 despite having $12 billion of assets under management as he felt that he was unable to deliver adequate returns to his investors. He was also one of the managers of George Soros’ Quantum Fund and part of the Sterling short trade which ‘broke the Bank of England’. Duquesne Capital is regarded as one of the best hedge funds averaging an annual return of almost 30% and just having five down quarters in a period of 120 quarters.
Wisdom from Druckenmiller
I have this pasted on my desk
How difficult it is just to follow just 4 points pic.twitter.com/fk5t0AuY3f
— MacroValue (@pradeeepk) December 22, 2016
Stanley Druckenmiller has his own unique style of investing which involves in-depth research on a stock and sector and then making concentrated bets. He says that the most important thing to figure out is what makes a stock go up or down and central bank policies are a key factor behind stock market movements. Most analysts do not understand what makes a stock go up or down Druckenmiller does not use valuation to time the market as he believes that liquidity and technical analysis should be used for timing. Valuation only indicates how far the stock can go up or down after a catalyst changes the market direction.
In its latest 13F filing, Druckenmiller’s Duquesne Family Office disclosed an equity portfolio worth $1.13 billion as of the end of September. The sector that amassed the largest share was technology, which represented 29% of the portfolio, followed by Finance and Healthcare, which represented 22% and 21%, respectively. With this in mind, let’s take a look at Duquesne’s top technology picks, which include Alibaba Group Holding Ltd (NYSE:BABA), Broadcom Ltd (NASDAQ:AVGO), Activision Blizzard, Inc. (NASDAQ:ATVI), Amazon.com, Inc. (NASDAQ:AMZN), and Facebook Inc (NASDAQ:FB).
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.
Alibaba Group Holding Ltd (NYSE:BABA) represented the fourth-largest holding in Duquesne’s latest 13F filing, as the fund initiated a new position during the third quarter and held 470,600 shares worth $49.7 million at the end of September. Among other funds that bought shares of Alibaba Group Holding Ltd (NYSE:BABA) were Chase Coleman’s Tiger Global Management and Stephen Mandel’s Lone Pine Capital which bought more than 5 million shares each. The shares of Alibaba Group Holding Ltd (NYSE:BABA) have rallied by 13.7% in the last six months. The company has a leading presence in the e-commerce space in China and has also diversified into gaming, digital payments, and financial services. Its recent partnership with DreamWorks and Amblin Partners will grant it a competitive edge in China. The number of funds tracked by us long the stock increased by 35 to 104 during the third quarter.