Below we present the list of 5 Stocks That Have Grabbed Stanley Druckenmiller’s Attention in 2022. For our methodology and a more comprehensive list, please see 10 Stocks That Have Grabbed Stanley Druckenmiller’s Attention in 2022.
5. Cenovus Energy Inc (NYSE:CVE)
Value of Duquesne Capital’s 13F Position: $24 million
Number of Hedge Fund Shareholders (as of March 31): 47
Cenovus Energy Inc (NYSE:CVE) is the first of three energy stocks to appear on the second half of this list, as Stanley Druckenmiller built a new position of 1.44 million shares in the Canadian oil company. Hedge funds have been paying serious attention to Cenovus is recent quarters, as it hit record levels of ownership among hedge funds for the second straight quarter during Q1.
Cenovus Energy Inc (NYSE:CVE) just wrapped up a deal with BP p.l.c. (NYSE:BP) that will see the two companies swap their stakes in two different Canadian-based energy projects. Cenovus takes over BP’s 50% stake in the Sunrise oilsands project, while BP gets $600 million in cash, a future variable payment worth up to $600 million, and takes on Cenovus’ 35% stake in the undeveloped Bay du Nord offshore drilling project. The deal better leverages both sides’ expertise and gives Cenovus full ownership of the Sunrise project, which it’s been operating since early 2021. The firm plans to increase capacity at the site by 20% to 60,000 barrels per day.
Cenovus Energy Inc (NYSE:CVE) was a key contributor to the L1 Capital Long Short Fund Limited’s prospects in 2021. Here is what the fund had to say about its position in Cenovus Energy Inc. in its Q4 2021 investor letter:
“Detailed, bottom-up stock research remains the investment team’s primary focus and the core driver of portfolio performance. 2021 once again demonstrated the team’s ability to identify ‘winners’ through extensive company and industry research across a diverse range of sectors. Key contributors included Cenovus Energy, (due to) recovering oil price leading to improved investor sentiment, consensus earnings upgrades and strong free cashflow generation.”
4. The PNC Financial Services Group Inc. (NYSE:PNC)
Value of Duquesne Capital’s 13F Position: $31.1 million
Number of Hedge Fund Shareholders (as of March 31): 49
The PNC Financial Services Group Inc. (NYSE:PNC) is the only non-energy stock to feature among Druckenmiller’s five biggest buys of the quarter. Druckenmiller’s fund built a new position of 168,726 PNC shares during the quarter, making it the fund’s 16th-largest long position. Fellow billionaire Steve Cohen also added PNC to his hedge fund’s 13F portfolio during Q1.
The PNC Financial Services Group Inc. (NYSE:PNC) missed revenue estimates in Q1, pulling in $4.69 billion against expectations of $4.76 billion. The investment bank’s adjusted EPS topped estimates by $0.56 however, coming in at $3.29, thanks in part to greatly limiting noninterest expenses. PNC’s loans increased by 1% quarter-over-quarter during the period, while investment securities grew by 5%.
The PNC Financial Services Group Inc. (NYSE:PNC) was so confident in its quarterly performance that it made a substantial 20% raise to its dividend payments, which now pay out $1.50 quarterly and yield over 3%. The company also bought back $1.2 billion worth of its shares during the first quarter.
3. Pioneer Natural Resources Company (NYSE:PXD)
Value of Duquesne Capital’s 13F Position: $32.6 million
Number of Hedge Fund Shareholders (as of March 31): 51
130,375 shares of Pioneer Natural Resources Company (NYSE:PXD), which have gained 38% this year, were added to Duquesne Capital’s portfolio during Q1. There was a 24% increase in hedge fund ownership of the stock during the quarter.
Pioneer Natural Resources Company (NYSE:PXD) returned $2 billion to shareholders following its strong Q1 results, paying out a variable dividend of $6.60 per share on top of its fixed quarterly payments of $0.78. That amounted to an impressive 13% dividend yield on an annualized basis. Pioneer has the potential to return some serious cash to shareholders in the coming years thanks to its pristine balance sheet and strong margins.
The Clearbridge Investments Mid Cap Growth Strategy likes Pioneer Natural Resources Company (NYSE:PXD)’s long-term potential even should energy prices decline, having this to say about the company in its Q1 2022 investor letter:
“Our underweight to the energy sector weighed on performance, as energy prices skyrocketed from inflationary pressures and the threat of reduced supply. We have a limited footprint within the sector but continue to look for companies that will generate strong, long-term returns such as Pioneer Natural Resources. Pioneer is an oil and gas exploration and production company that offers a combination of a strong asset base, quality balance sheet and compelling free cash flow yield at current commodity prices. We believe Pioneer has strong underlying drivers that will generate attractive risk-adjusted returns beyond shorter-term fluctuations in energy prices.”
2. Coterra Energy Inc. (NYSE:CTRA)
Value of Duquesne Capital’s 13F Position: $47.9 million
Number of Hedge Fund Shareholders (as of March 31): 40
Coterra Energy Inc. (NYSE:CTRA), shares of which have been red-hot this year, was also added to Druckenmiller’s growing stable of energy holdings during Q1. The billionaire money manager’s fund bought 1.78 million shares of the stock during the quarter, which ranked as its 11th-largest long position on March 31.
Coterra Energy Inc. (NYSE:CTRA) shares are still up by 46% this year despite sagging by 20% over the past week or so as natural gas prices have tumbled from highs not seen since the financial crisis. Nonetheless, natural gas prices are still more than twice as high as they were at the start of the year, which is a tremendous boon for Coterra, as 87% of the company’s production is either natural gas or natural gas liquids.
Like Pioneer, Coterra Energy Inc. (NYSE:CTRA) also returned a significant amount of cash to shareholders following its Q1 results, over $660 million in total. The company also raised its full-year free cash flow guidance by 50% to $4.5 billion, so shareholders like Druckenmiller can expect even greater payouts in the quarters to come.
1. Teck Resources Ltd (USA) (NYSE:TECK)
Value of Duquesne Capital’s 13F Position: $97.8 million
Number of Hedge Fund Shareholders (as of March 31): 57
Druckenmiller saved his biggest new investment for Teck Resources Ltd (USA) (NYSE:TECK), building a stake that was valued at more than twice that of the next largest new investment. Teck Resources was one of the most popular buys among hedge fund managers in Q1, as ownership of the stock jumped by 39%.
Teck Resources Ltd (USA) (NYSE:TECK) is in a great position to capitalize on what is expected to be robust demand for copper in the coming decades. Copper demand is expected to rise by anywhere from 18%-28% over the next decade, and by as much as 100% by 2050. Meanwhile, copper production is actually expected to decline over the next decade, even when factoring in probable new projects. That could quickly change however, as a supply glut in 2021 appears to have corrected into what analysts are projecting to be a slight oversupply this year and a further oversupply next year.
Nonetheless, there’s tremendous potential for a company like Teck Resources Ltd (USA) (NYSE:TECK), which has developed a robust pipeline of copper projects thanks to its two decades of investment in exploration and M&A activity, to meet the growing demand for copper in the years and decades to come.
For more on the latest trades made by hedge fund titan Stanley Druckenmiller, check out Stanley Druckenmiller Was Right About These 9 Stocks and Billionaire Stanley Druckenmiller’s 2022 Portfolio: 10 Value Stock Picks.
Disclosure: None.
