| Stanley “Stan” Druckenmiller listens to a question during an interview in New York on Feb. 25, 2013 (Photo credit: Scott Eells/Bloomberg). |
Hedge fund legend Stanley Druckenmiller has aggressively revamped his family office’s U.S. stock portfolio.
The onetime top investment officer for George Soros, who founded Duquesne Capital Management and converted it to a family office in August 2010, liquidated 28 of his 41 individual holdings in the fourth quarter, keeping just 13. He also established 19 new positions.
This compares with the third quarter, when Druckenmiller sold 12 of his 31 U.S. longs at the time. The major overhaul seems to reflect bullish public comments he made two days after the November U.S. elections, when he proclaimed on CNBC, “I have a large bet on economic growth.”
Although Duquesne has long been closed to outside money, there is always keen interest in Druckenmiller’s investment activities, given that he earned 30 percent annualized returns when he was managing money for others.
When he appeared on CNBC back in November, Druckenmiller was optimistic a Trump administration would result in serious tax reform and deregulation. Earlier in 2016 the born-again bull had delivered a dour, depressing, pessimistic view of the global economy and financial markets when he spoke in May at the annual Sohn Investment Conference. That’s when he famously concluded his remarks by declaring: “The conference wants a specific recommendation from me. I guess ‘Get out of the stock market’ isn’t clear enough.” He added that gold “remains our largest currency allocation.”
As of year-end, seven of Duquesne’s top ten positions were established in the fourth quarter. This includes shares of the iShares Russell 2000 Index, which became Duquesne’s largest holding in the fourth quarter, accounting for more than 13 percent of U.S. equity assets. This underscores Druckenmiller’s underlying bullishness on the stock market in general.
An ETF betting on economically sensitive industrial stocks became the ninth-largest holding, accounting for 5 percent of equity assets.
Duquesne also made a big bet on financials in the fourth quarter. Nearly 27 percent of its U.S. equity assets were allocated to five financial stocks that comprise the portfolio’s top ten holdings alone.
For example, the fifth-largest long is an ETF betting on the financial sector.
Duquesne also bet more than 21 percent of assets on four individual bank stocks: Bank of America Corp., an earlier holding whose position the family office aggressively boosted in the fourth quarter; Citigroup; the PNC Financial Services Group; and Wells Fargo & Co.
On the other hand, Duquesne aggressively liquidated its stakes in a variety of technology stocks in the fourth quarter. They include Alibaba Group Holding, its fourth-largest long at the end of the third quarter, and Broadcom, its seventh-largest at the time.
Duquesne’s biggest sale, however, was its huge bet on emerging markets through the ETF iShares MSCI Emerging Markets.
As for his big gold bet, Druckenmiller told CNBC in the interview that he sold all of his investment in the metal on election night. However, a week ago he told Bloomberg he bought back some gold in late December and January.
“I wanted to own some currency, and no country wants its currency to strengthen,” he said in an interview on February 8. “Gold was down a lot, so I bought it.”
We’ll see how long Druckenmiller sticks with his long bets on financials, infrastructure, and the stock market in general.
