Duquesne Capital Management, the hedge fund that was founded by Stanley Druckenmiller (Trades, Portfolio) in 1981 and converted into a family office in 2010, recently disclosed its 13F portfolio updates for the fourth quarter of 2022, which ended on Dec. 31.
In addition to being the president, CEO and chairman of Duquesne Capital Management, Druckenmiller managed money for George Soros (Trades, Portfolio) as the lead portfolio manager of the Quantum Fund, and the partners famously shorted the British pound in 1992. Soros’ influence can be seen in Druckenmiller’s trading style; he uses a top-down approach that combines long positions and short positions in all types of assets, including stocks, bonds, currencies and futures.
According to its latest 13F filing, the firm’s top new buy of the quarter was Nvidia Corp. (NVDA, Financial). Its other top trades included an addition to Eli Lilly and Co. (LLY, Financial) and the sale of its stakes in tech giants Amazon.com Inc. (AMZN, Financial) and Microsoft Corp. (MSFT, Financial).
Investors should be aware 13F reports do not provide a complete picture of a guru’s holdings. They include only a snapshot of long equity positions in U.S.-listed stocks and American depository receipts as of the quarter’s end. They do not include short positions, non-ADR international holdings or other types of securities. However, even this limited filing can provide valuable information.
Nvidia
Druckenmiller’s firm initiated a new holding worth 582,915 shares in Nvidia (NVDA, Financial) after selling out of its previous position in the stock in the fourth quarter of 2017. The position has a weight of 4.22% in the equity portfolio. During the quarter, shares traded for an average price of $146.65.
Nvidia is primarily known for designing graphics processing units and system on a chip units. It has a strong presence in the mobile computing and automotive markets and is a leader in artificial intelligence and internet of things innovations.
The stock has come under pressure due to the correction of the semiconductor shortage and a decline in demand for its gaming graphics cards, which has hit its earnings hard. This was due in part to the cyclical nature of the gaming industry and in part to the pull-forward in demand caused by the pandemic and supply chain issues. On the positive side, the company is seeing less impact than expected from the U.S. export restrictions to China.
Eli Lilly
The firm upped its stake in Eli Lilly (LLY, Financial) by 52.14% for a total holding of 737,725 shares. The trade added 4.58% to the equity portfolio at the quarter’s average share price of $354.56.
Eli Lilly is a biotechnology company headquartered in Indianapolis. Founded in 1876, the company now sells its products in more than 125 countries. It is best known for its neuroscience developments and pipeline, though it also offers products in the areas of diabetes, oncology, cardiovascular and critical care.
The biotech has a new diabetes drug called Mounjaro that recently launched. In addition to its effectiveness for those with type 2 diabetes, it has also been recommended for weight loss, which is a much bigger market in the U.S. and has thus caused the drug to frequently sell out. Eli Lilly also has a promising Alzheimer’s drug in its pipeline, which it claims “reduced brain amyloid plaque levels vs. baseline by 65.2% compared with 17.0% for Aduhelm [from Biogen (BIIB, Financial)] at six months.” These successes have helped the stock to more than double since 2020.
Amazon.com
The firm sold all 906,250 of its Amazon.com (AMZN, Financial) shares after just acquiring the position in the previous quarter. The investment used to take up 5.81% of the equity portfolio. Shares traded for an average price of $98.78 during the quarter.
Amazon is a U.S.-based multinational technology company that got its start as an online bookseller and grew into an e-commerce giant, eventually expanding into online advertising, cloud computing, streaming and even artificial intelligence.
The company's main revenue drivers, e-commerce and cloud, are struggling against the current economic backdrop. The low-margin e-commerce business has been hit particularly hard as inflation drives up prices, while the cloud business is still growing rapidly but not as fast as Wall Street had predicted. This has led to the stock trading at the same price as three years ago, earning it a “possible value trap” rating from GuruFocus as the price is too far below the fair value estimate.
Microsoft
The firm also sold out of its 193,535-share position in Microsoft (MSFT, Financial), slashing 2.56% of the equity portfolio. During the quarter, shares changed hands for an average price of $239.99.
Microsoft is an American tech giant best known for its Windows operating systems, Microsoft Office suite and web browsers. It also has gaming operations through Xbox and has tapped cloud computing, internet of things and artificial intelligence for growth avenues.
Druckenmiller’s bearishness on this tech giant could be due to his overall bearish view of the current economic environment. At the Sohn Conference last year, he said, “I assume, and pretty strongly, soon we're going to have a recession sometime in 2023." This would negatively impact growth stocks, and despite Microsoft’s strong financial position with a cash-debt ratio of 1.66 and a Piotroski F-Score of 5 out of 9, it still falls into the growth stock category.
See also
The firm’s other notable trades during the quarter included additions to Meta Platforms Inc. (META, Financial), Lamb Weston Holdings Inc. (LW, Financial) and Chevron Corp. (CVX, Financial).
As of the quarter’s end, Duquesne Capital Management’s 13F portfolio consisted of holdings in 58 common stocks valued at a total of $2.02 billion. The top holding was Coupang Inc. (CPNG, Financial) with 14.77% of the equity portfolio, followed by Eli Lilly with 13.36% and Chevron with 8.74%.
In terms of sector weighting, the firm was most invested in health care, consumer cyclical and energy stocks.
