What Scared Stan Druckenmiller’s Family Office Away From CBS?
Stan Druckenmiller is a billionaire, and was the long-time manager of Duquesne Capital. Now, he oversees a family office, but his investing strategy is mostly the same. Here are some things we noticed when comparing Druckenmiller’s filing for the end of September with previous filings:
Bullish on high-flying tech. The theme that immediately jumped out to us when parsing through Druckenmiller’s latest 13F filing is a clear bullishness toward two tech stocks that have flown high this year: Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN). The latter was a new position for the billionaire, and sits as the fourth largest stake in his equity portfolio. Google, meanwhile, has been in Druckenmiller’s top five since the fourth quarter of 2012.
Shares of Google are up 46% year-to-date, and while we’re not surprised the fund has maintained its position in the moderately valued company, it’s a bit interesting that it established a new stake in Amazon. The e-commerce giant is up nearly 800% over the past half-decade and more recently, shares have mimicked Google’s gains quite well. Amazon basically breaks the valuation metrics, yes, but its growth is off the chart; sell-side analysts are predicting 35% annual EPS growth over the next five years. That’s rare.
Changes mind about CBS. This may be the most surprising news of the entire filing. After establishing a new stake in CBS Corp (NYSE:CBS) in the second quarter, and after buying a healthy $100 million worth at that, Druckenmiller’s family office has cut their stake by 75%. CBS was the second largest holding in their equity portfolio and now it sits at No. 10. CBS’ planned REIT conversion still looks like it will be a go, and shares haven’t taken a fall-off in the past few months, so it’s difficult to know why the billionaire made this move. Earnings have beaten in two consecutive quarters and all other financials don’t scare us, so it’s quite possible he was happy with the 15% to 20% gain he likely received from the short-term holding.
Energy companies. One sector Druckenmiller and Duquesne have been beating pretty heavy on is energy. Three of the fund’s top ten positions are new stakes in Schlumberger (NYSE:SLB), Halliburton (NYSE:HAL) and Pioneer Natural Resources (NYSE:PXD). Schlumberger and Halliburton are, in particular, a couple of the biggest oilfield service giants out there, and a bullishness here translates into a positive sentiment of the domestic oil and gas industry. Cheniere Energy (NYSEMKT:LNG), which will be part of what is essentially an oligopoly in the natural gas export terminal business, was also a new position for Druckenmiller.
Airline bear. Lastly, the final theme that stands out from this filing is an apparent bearishness toward major airliners. The fund reduced its stake in Delta (NYSE:DAL) by 20% and closed out its entire position in US Airways (NYSE:LCC). Judging by the cut in the so-called ‘super-Delta,’ we can assume that Druckenmiller isn’t just selling US Airways because he was afraid a ‘super-US Airways’ could never come to fruition. We now know that the DOJ did approve the American-US Airways merger, but from this billionaire’s eyes, it appears he didn’t want anything to do with the ongoing consolidation in this industry at all.
Disclosure: I am long LCC