In this article, we look at why billionaire Stanley Druckenmiller just dumped 10 stocks from his portfolio. You can skip our comprehensive analysis of Duquesne Capital's history, investment philosophy, and hedge fund performance and go directly to Billionaire Stanley Druckenmiller Just Dumped These 5 Stocks.
Meta Platforms, Inc. (NASDAQ:FB), Moderna, Inc. (NASDAQ:MRNA), and Zoom Video Communications, Inc. (NASDAQ:ZM) were a few of the most prominent holdings that were dumped during the fourth quarter by famed investor Stanley Druckenmiller, who believes the current market bubble is bigger than the dot-com era one.
Stanley Druckenmiller is the billionaire founder of New York-based Duquesne Capital, which was closed to outside investors in 2010. The firm, which was initially launched in 1981, now functions as a family office that manages Druckenmiller’s substantial wealth, which is estimated by Bloomberg to be $10.4 billion.
Druckenmiller has sounded alarm bells in recent months about what he believes is a mammoth bubble in the market that has crept across “every asset on the planet”, he is quoted as saying during an interview with fellow hedge fund titan Seth Klarman at the Boston Investment Conference in November.
Druckenmiller also took issue with the fed’s stimulus efforts, saying they were further contributing to the bubble’s inflation. However, he did praise the Fed’s move to drop forward guidance, which he believes will allow the latest economic data to guide more effective policymaking.
Given his stance on the market, it’s not surprising that Druckenmiller’s family office sold off several notable holdings during Q4, including Meta Platforms, Inc. (NASDAQ:FB). The social media giant’s long-term metaverse initiative, which lost a shocking $10 billion in Q4, certainly doesn’t appear to align with Druckenmiller’s shorter-term investment philosophy of trying to imagine the world in 18 months and who the winners and losers might be during that timeframe.
Druckenmiller also sold off 14 other former holdings during Q4, the bulk of which we’ll analyze in this article.
Billionaire Stanley Druckenmiller Just Dumped These 10 Stocks
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The following list of stocks were the largest holdings sold off by Stanley Druckenmiller’s family office during Q4 according to its 13F filing for the reporting period of December 31, 2021. The positions are ranked in order of their former value in Duquesne’s portfolio.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q4 2021 reporting period.
Billionaire Stanley Druckenmiller Just Dumped These 10 Stocks10. Nektar Therapeutics (NASDAQ:NKTR)
Number of Hedge Fund Shareholders: 24
Druckenmiller unloaded his entire 1-million share position in Nektar Therapeutics (NASDAQ:NKTR) during Q4 less than a year after first taking a stake in the company. Druckenmiller ended up taking a loss on the investment, as NKTR shares have trended downwards throughout the last year and sit more than 90% off their all-time highs hit in 2018.
Other hedge funds have also been unloading Nektar Therapeutics (NASDAQ:NKTR) shares in recent quarters, as 24 funds were long the stock on December 31, down from 31 funds in late 2018. Lee Ainslie’s Maverick Capital held the largest NKTR position at the end of 2021 among those 24 funds at 5.82 million shares, with the stock ranking as one of the 5 Healthcare Stocks to Buy According to Lee Ainslie’s Maverick Capital.
SVB Leerink analyst Daina Graybosch cut the firm’s price target on Nektar Therapeutics (NASDAQ:NKTR) to $18 from $19 on November 8 while maintaining a ‘Market Perform’ rating on the shares. Graybosch believes that the company’s Phase III trial for Bempeg has a higher likelihood of failure in its lead indications than typical late-stage trials.
That is likely one of the reasons why Druckenmiller didn’t like the near-term potential for Nektar Therapeutics shares, just as he appears to have lost near-term conviction in Meta Platforms, Inc. (NASDAQ:FB), Moderna, Inc. (NASDAQ:MRNA), and Zoom Video Communications, Inc. (NASDAQ:ZM).
9. StoneCo Ltd. (NASDAQ:STNE)
Number of Hedge Fund Shareholders: 35
Druckenmiller also unloaded Brazilian fintech company StoneCo Ltd. (NASDAQ:STNE) from his family office’s portfolio during Q4, selling off his entire stake of 382,100 shares just one quarter after purchasing them. Druckenmiller again chose to cut his losses on an ill-timed investment before more damage could be done, as STNE shares have continued to sink, down by 83% since the middle of 2021.
StoneCo Ltd. (NASDAQ:STNE) shares have been battered by the recent investor defection from high-growth stocks, as well as rising treasury yields, some of which rose to their highest levels in two years earlier this year. StoneCo can’t lay the blame entirely on outside factors however, as its third quarter financial results, which included its EPS falling by more than half year-over-year, also disappointed investors.
Other hedge funds have also been abandoning StoneCo Ltd. (NASDAQ:STNE) recently, as hedge fund ownership of the stock has dropped by nearly 25% over the last two quarters.
8. Farfetch Limited (NYSE:FTCH)
Number of Hedge Fund Shareholders: 47
Farfetch Limited (NYSE:FTCH) represents another short-lived position in the 13F portfolio of Duquesne Capital, with the position being initiated in the second quarter of 2021. In Q4, the family office sold off all 629,470 of its shares in the company. Hedge fund ownership of the e-commerce fashion retailer has tumbled by 30% over the last two quarters.
As with the previous two holdings, Farfetch Limited (NYSE:FTCH) shares have fallen throughout much of the last year, save for a brief spike in mid-November that may have offered a prime selling window for Druckenmiller, though it’s unknown when during Q4 his position was unloaded.
Farfetch Limited (NYSE:FTCH) shares have also rebounded slightly in the last week after the company’s fourth quarter results revealed some encouraging operational improvements. The company’s EBITDA surged by more than 250% year-over-year during the quarter to $36.1 million, and it guided for further EBITDA margin growth and greater revenue growth in 2022. Nonetheless, FTCH shares remain down by over 64% in the last year.
In its Q4 2021 investor letter, the RiverPark Large Growth Fund predicted strong long-term growth for Farfetch. Here is what it had to say about the company:
“Farfetch: FTCH shares struggled in 2H21 as consumer behavior remains hard to forecast, supply chain disruptions continue to be elevated, and Apple’s App Tracking Transparency changes make customer outreach difficult and more expensive. Despite these headwinds, which we believe to be transitory, Farfetch still reported 28% gross merchandise volume growth, 33% revenue growth, and 43% gross profit growth.
In March, we had established a small position in this leading online luxury fashion retail platform. The company is benefitting from the secular trends of growing ecommerce, the global market for personal luxury goods, and emerging market growth, particularly in China. Luxury fashion has much lower online penetration than general ecommerce, and Farfetch is differentiated because it has developed longstanding relationships with image conscious luxury product companies. Because of this focus, Farfetch has both higher average order values and higher take rates relative to peers, driving higher gross margins. We believe the company can grow revenue and EBITDA more than 20% and 50% per year, respectively, for the foreseeable future. With its extremely low capital needs—capital expenditures were less than 2% of revenue last year—we expect the company’s free cash flow to grow even faster.”
7. Formula One Group (NASDAQ:FWONK)
Number of Hedge Fund Shareholders: 46
46 hedge funds are long Liberty Media Formula One Series C (NASDAQ:FWONK) as of December 31, up from 40 a quarter earlier, but Druckenmiller’s family office isn’t one of them. It sold off its 485,800 shares during Q4, closing the position it had opened a year earlier. Liberty Media Formula One Series C (NASDAQ:FWONK) shares gained 70% between the start of Q4 2020 and the end of 2021, so the holding was a successful one for Druckenmiller.
While Druckenmiller may not see much more room for share price growth in the coming 18 months, hedge funds, in general, appear to be bullish on the changes being made by the Liberty Media Formula One Series C (NASDAQ:FWONK)’s management as well as the racing league’s untapped potential that’s been hindered by the ongoing effects of Covid-19.
6. Teck Resources Limited (NYSE:TECK)
Number of Hedge Fund Shareholders: 41
Duquesne Capital sold off its Teck Resources Ltd (USA) (NYSE:TCK) holding 1.04 million shares during Q4, closing the position in the Canadian mining company that it opened in the third quarter of 2020. Teck Resources is near its all-time high in hedge fund ownership, as 41 funds were shareholders at the end of 2021.
With coal prices on the rise, Teck Resources Ltd (USA) (NYSE:TCK) is reportedly considering selling off a 10% stake in its metallurgical coal business, which could be worth close to $800 million.
Teck Resources Ltd (USA) (NYSE:TCK) is coming off its strongest quarter ever, pulling in CAD2.54 ($1.99) in EPS, a greater than 400% jump year-over-year, while revenue soared to CAD4.41 billion ($3.45 billion), a 72% year-over-year increase. The company also set quarterly and annual records for adjusted EBITDA.
However, with the company’s shares up by 74% over the last year, Druckenmiller’s decided to move on, casting Teck Resources into the same pit of former holdings that also contains Meta Platforms, Inc. (NASDAQ:FB), Moderna, Inc. (NASDAQ:MRNA), and Zoom Video Communications, Inc. (NASDAQ:ZM), as you’ll see in the conclusion of this article.
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Disclosure: None. Billionaire Stanley Druckenmiller Just Dumped These 10 Stocks is originally published at Insider Monkey.