Pessimism, doom and gloom was starting to be visible in Stanley Druckenmiller’s tone last year when the billionaire repeatedly warned about the upcoming collapse and recession. At a conference in New York in September last year, the 69-year old billionaire went so far as to say he’d be “stunned” if we didn’t have a recession in 2023. The reason behind Druckenmiller’s pessimism is simple. He believes quantitative easing that went on for almost a decade has created the troubles we are facing today.
Last year the billionaire said the Fed policymakers “have put themselves and the country, and most importantly the people of the country, in a terrible position.”
Druckenmiller was, however, concerned that the Federal Reserve would stop raising interest rates before reaching its target.
“I hope they finish the job. You have to slay the dragon,” Druckenmiller said.
Druckenmiller’s fear stems from his idea that inflation should be controlled and never be left unchecked. He said during his Bloomberg interview that inflation is a “killer” and to maximize employment prices should be stabilized. However, he doesn’t think controlling inflation is as simple as raising interest rates. This worked in the 1980s, according to the billionaire, because “the economy wasn’t nearly as leveraged and we had not been through an asset bubble.”
Druckenmiller Shorting Stocks
Talking to Bloomberg, Druckenmiller in September revealed that he was shorting stocks and his portfolio had been 0% to 20% short since January 5. Interestingly, Druckenmiller at the time said that crypto might gain more popularity if distrust in central banks increases.
In 2023 we saw how regional banks started to waver after the SVB collapse and crypto also posted a strong rally.
But don’t let Druckenmiller’s pessimism make you believe that it’s time to sell. On the contrary, Druckenmiller has been buying a lot of stocks and adding to his portfolio. His first quarter of 2023 portfolio shows that he bought several technology stocks, including Microsoft, Alphabet, Amazon, Taiwan Semiconductor and Marvell Technology Inc.
Druckenmiller's Thoughts on AI
Part of the reason why the billionaire piled into technology this year is his bullishness on AI. At the 2023 Sohn Conference, Druckenmiller said that AI could be “ every bit as impactful as the internet.” In addition to buying MSFT, GOOGL and AMZN during the first quarter, his hedge fund also bought a huge stake in Iqvia Holdings Inc., a healthcare technology company which boasts AI capabilities. The company’s management briefly touched upon its Embedded Intelligence solutions in Q4 earnings call:
“As you know, IQVIA’s Human Data Science Cloud offers clients a combination of extensive data networks, data integration, and embedded intelligence, all of which help our clients deal with the challenge of increased data complexity and volume. A top-10 pharma awarded IQVIA our largest ever commercial managed services deal where we will take responsibility for managing the end-to-end commercial analytics for all their commercial brands globally. Personalization of care is becoming a focus of our customers’ commercial strategy. This quarter, IQVIA was awarded a major patient support program by a top-10 pharma for their cardiology product displacing the incumbent vendor.”
But it wasn’t just AI that Druckenmiller talked about in at the Sohn Conference. Pessimism and warnings again prevailed the billionaire’s tone as he said the major downturn and recession he has been warning about could be visible as soon as the current quarter.
While the billionaire said that the recession would not be as bad as seen in 2008, he said that “it’s just naive not to be open-minded to something really, really bad happening."
The falling retail sales and banking crisis have made it clear to Druckenmiller that we are headed for a hard landing. Unlike others, Druckenmiller doesn’t let vague terms go undefined. He believes hard landing is when the unemployment rate exceeds 5%, corporate profits fall at least 20% and bankruptcies rise.
"Unbelievable Opportunities"
Yet, Druckenmiller said there would be a “unbelievable opportunities” in the next couple of years and recommended investors to preserve their capital before these opportunities present themselves.
Billionaire Stanley Druckenmiller 2023 Portfolio: Top 10 Stock Picks
Stan Druckenmiller
Our Methodology
For this article, we picked the top 10 stocks from the first quarter of the 2023 portfolio of Duquesne Family Office. Some notable names in Druckenmiller's portfolio include Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG) and NVIDIA Corporation (NASDAQ:NVDA).
Billionaire Stanley Druckenmiller 2023 Portfolio: Top 10 Stock Picks
Amazon.com, Inc. (NASDAQ:AMZN) is a new arrival in Stanley Druckenmiller’s portfolio, as the billionaire loaded up on over 807,000 shares of the ecommerce company which had a total worth of about $83.4 million. Amid concerns of slowing growth in the Cloud business, Amazon.com, Inc. (NASDAQ:AMZN) is doubling down on its AWS business and recently revealed plans to invest a massive $12.7 billion in cloud infrastructure in India.
Arch Capital made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q1 2023 investor letter:
“Replacing our Wix investment is Amazon.com, Inc. (NASDAQ:AMZN), a company we are sure you have heard of before. We believe the company’s long-term growth runway, profit potential, and competitive advantages were being vastly underrated in early January when its market cap was well below $1 trillion. We think early January was one of those rare times you could buy a special business like Amazon at a discounted valuation. Our hope is that – if we are right about its competitive advantages in retail and cloud computing – our Amazon stake will end up being a permanent holding in the limited partnership.”
Billionaire Stanley Druckenmiller opened a new position worth over $91 million in Alphabet Inc. (NASDAQ:GOOGL) during the first quarter of 2023. Over the past one month Alphabet Inc. (NASDAQ:GOOGL) has gained about 18% as investors start believing in the company’s leverage in the AI space, thanks to spectacular capabilities of its generative AI service called Bard. Alphabet Inc. (NASDAQ:GOOGL) also got a push after latest reports revealed that Samsung suspended internal discussion about a potential shift to Bing search engine for its smartphones.
As of the end of the fourth quarter of 2022, 209 hedge funds tracked by Insider Monkey had stakes in Alphabet Inc. (NASDAQ:GOOGL). This makes Alphabet Inc. (NASDAQ:GOOGL) the third most popular stock among the 943 hedge funds in Insider Monkey’s database.
Diamond Hill Large Cap Strategy made the following comment about Alphabet Inc. (NASDAQ:GOOG) in its Q1 2023 investor letter:
“We did have several strong performing stocks this quarter. Our top contributors to return included NVR, Amazon, Alphabet Inc. (NASDAQ:GOOG), Microsoft and Booking Holdings, all of which posted double-digit gains. Shares of media and technology giant Alphabet outperformed as the company announced expense discipline while continuing to invest in its core products of Google Search, YouTube and Google Cloud.”
North Carolina-based IQVIA Holdings, Inc. (NYSE:IQV) sells technologies solutions for the life sciences industry. Billionaire Stanley Druckenmiller acquired 474,500 shares of IQVIA Holdings, Inc. (NYSE:IQV) during the first quarter of 2023, ending the period with a $94.4 million stake in the company. In April IQVIA Holdings, Inc. (NYSE:IQV) posted its first quarter results. Adjusted EPS in the quarter came in at $2.45, beating estimates by $0.04. Revenue in the quarter jumped 2.2% year over year to $3.65 billion, surpassing estimates by $40 million.
As of the end of the last quarter of 2022, 60 hedge funds had stakes in IQVIA Holdings, Inc. (NYSE:IQV), according to Insider Monkey’s database of hedge funds.
Texas-based KBR, Inc. (NYSE:KBR) sells engineering, technology, scientific and defense solutions. Billionaire Druckenmiller increased his stake in the company by 6% in the first quarter, boosting his stake in KBR, Inc. (NYSE:KBR) to $99.1 million.
Insider Monkey’s database of 943 hedge funds shows that 40 hedge funds had stakes in KBR, Inc. (NYSE:KBR) as of the end of the fourth quarter of 2022. The biggest stakeholder of KBR, Inc. (NYSE:KBR) Lauren Taylor Wolfe’s Impactive Capital which had a $230 million stake in the company.
KBR, Inc. (NYSE:KBR) is also a dividend-paying stock, with a yield of about 0.92%.
Earlier in May, KBR, Inc. (NYSE:KBR) announced first quarter results. Adjusted EPS in the quarter came in at $0.67 beating estimates by $0.09. Revenue fell 0.6% year over year to $1.7 billion, surpassing estimates by $90 million.
Teck Resources Ltd (NYSE:TECK) shares have gained about 15% year to date in 2023 as of May 23. Billionaire Stanley Druckenmiller increased his holding in Teck Resources Ltd (NYSE:TECK) by 81% in the first quarter. Duquesne now owns a $118 million stake in Teck Resources Ltd (NYSE:TECK).
Teck Resources Ltd (NYSE:TECK) is currently in the news after Switzerland-based commodities company Glencore said that it’s willing to sweeten its offer to buy Teck. In March Glencore offered to buy Teck Resources Ltd (NYSE:TECK) for $22.5 billion.
Insider Monkey’s database of 943 hedge funds shows that 62 hedge funds had stakes in Teck Resources Ltd (NYSE:TECK) as of the end of the fourth quarter of 2022, up from 47 hedge funds in the previous quarter.
In addition to Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG) and NVIDIA Corporation (NASDAQ:NVDA), TECK is a notable stock in Druckenmiller's portfolio.
