In this article, we discuss the 10 top stock picks of billionaire Stan Druckenmiller.
When it comes to growth offerings, there are few money managers on Wall Street whose opinion carries more weight on the matter than Stanley Druckenmiller, the chief of New York-based investment firm Duquesne Capital. Druckenmiller oversees a 13F portfolio at his hedge fund that was worth close to $3 billion at the end of the second quarter of 2024. As the AI craze sweeps Wall Street, Druckenmiller has outlined his bullish long-term thesis on the new technology, recently appearing in a program on news platform CNBC to claim that the AI revolution was bigger than the excitement around blockchain, the internet, or other previous tech-related breakthroughs in the recent past.
During his appearance on the show, the billionaire noted that anybody who was talking about the internet back in 1999, before the advent of high-speed wireless connections and smart devices, could not have estimated that it would become as big as it did in the twenty or so years since that time. He further highlighted how the NASDAQ, the tech-heavy benchmark index, plunged 80% during the dotcom crisis at the turn of the millennium before offering investors handsome returns in the long-term. The money manager compared this to the AI universe and said that with the capital spending on the new tech, the big payoff in the sector might take four or five years to materialize.
Druckenmiller further added that AI was a trend like he had never seen before but cautioned listeners that he was not Warren Buffett and did not own things for 20 years – a reference to the long term investing strategy of the Oracle of Omaha. The remarks were in defense of his 13F activity during the first quarter of 2024. The billionaire told CNBC that he needed a break from some AI-focused positions because there had been a hell of a run, and a lot of what his fund recognized had become recognized by the marketplace. However, Drucknemiller clarified that he remained bullish on AI in the long-term.
Our Methodology
For this article, we scanned the stock portfolio of Duquesne Capital according to the 13F filings submitted at the end of the second quarter of 2024. We selected the top 10 stocks from this portfolio. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Stan Druckenmiller
Top Stock Picks of Billionaire Stan Druckenmiller
10. Teck Resources Limited (NYSE:TECK)
Number of Hedge Fund Holders: 69
Duquesne Capital’s Stake: $69,618,000
Teck Resources Limited (NYSE:TECK) is a diversified metals and mining firm. It is one of the most prominent and long-term holdings of Duquesne Capital. The hedge fund first disclosed a stake in the firm back in the third quarter of 2020. That holding comprised nearly 666,000 shares. Since then, Druckenmiller has been bullish on the company, taking his stake in the firm to more than 5 million shares at the end of 2023. However, since then, the billionaire has been shedding the stock steadily, reducing stakes by 17% and 68% in the first and second quarter of 2024 respectively. The stake presently accounts for 2.38% of the 13F portfolio of the hedge fund.
Investment advisors are in agreement with Druckenmiller over Teck Resources Limited (NYSE:TECK). Scotiabank has an Outperform rating on the stock with a price target of C$78. In an investor note, the advisory highlighted that the firm had lowered its near-term commodity price outlook to reflect the impact of weaker global demand, which seemed to be more than offsetting supply-side challenges.
9. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 70
Duquesne Capital’s Stake: $90,118,000
Philip Morris International Inc. (NYSE:PM) is a company that makes and sells cigarettes in more than 180 countries across the world. Late last month, the firm posted earnings for the second quarter of 2024, reporting earnings per share of $1.59, beating market expectations by $0.03. The revenue over the period was $9.4 billion, up over 5.5% year-on-year and beating analyst estimates by $280 million. The diluted EPS is forecast to be in a range of $5.89 to $6.01, at prevailing exchange rates, versus reported diluted EPS of $5.02 in 2023.
Philip Morris International Inc. (NYSE:PM) is one of the most followed stocks on Wall Street. Barclays recently raised the price target on the shares to $130 from $110 and kept an Overweight rating on the stock. In an investor note, the advisory shared that tobacco stocks had a strong Q2 as market multiples were set not on what was happening now, but on what could happen in the terminal year.
8. Kinder Morgan, Inc. (NYSE:KMI)
Number of Hedge Fund Holders: 41
Duquesne Capital’s Stake: $134,185,000
Kinder Morgan, Inc. (NYSE:KMI) operates as an energy infrastructure company primarily in North America. Many investors are focusing on the nuclear aspect of AI data center power needs. However, natural gas is also expected to play an important role in the generation of new electricity that is needed for data centers of the future. The company has a solid financial profile with an impressive dividend history. The firm is in prime position to capitalize on the AI data center boom as it controls more than 66,000 miles of natural gas pipelines that move 40% of the natural gas throughout the United States.
Last month, Argus analyst Bill Selesky upgraded Kinder Morgan, Inc. (NYSE:KMI) stock to Buy from Hold with a $24 price target. In an investor note, the analyst detailed that the Q2 EPS growth of the firm reflected increased earnings results from the Natural Gas Pipelines, Products Pipelines, and Terminals segments. He further added that the company was positioned for accelerating growth in the near term as demand for natural gas continued to increase in consumer, commercial, manufacturing and industrial applications.
7. Woodward, Inc. (NASDAQ:WWD)
Number of Hedge Fund Holders: 41
Duquesne Capital’s Stake: $166,399,000
Woodward, Inc. (NASDAQ:WWD) designs, manufactures, and services control solutions for the aerospace and industrial markets worldwide. The company recently released earnings for the second quarter of 2024. Several important figures stood out from the rest, like 16% sales growth, 63% net earnings growth, and improved free cash flow, mostly driven by aerospace and industrial segment performance. This strong performance also led to an upward revision of financial guidance, with increased revenue and free cash flow estimates for the full year. In the earnings report, the firm lifted the lower end of the revenue guidance by $100 million to more than $3.2 billion and the higher end of the range by $50 million.
Expert investment advisors have been closely following the growth story of Woodward, Inc. (NASDAQ:WWD). Truist recently upgraded the stock to Buy from Hold with a price target of $187, up from $152. In an investor note, the advisory noted that with China natural gas engine sales effectively removed from expectations, and taking into consideration the recent stock pullback, it was now the time to get off the sidelines as the firm was a compelling way to play the expected production ramp of narrow body aircraft.
6. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Duquesne Capital’s Stake: $178,999,000
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based technology company. It is one of the longest holdings in the Duquesne Capital portfolio. Druckenmiller first disclosed a stake in the tech giant during the first quarter of 2014. Since then, barring minor exceptions in 2016 and 2022, it has been a regular feature in the 13F portfolio of his hedge fund. The present holding, comprising over 400,000 shares, represents more than 6.1% of the total 13F portfolio. Latest filings reveal that Druckenmiller has reduced his exposure to the stock by more than 64% compared to filings for the first quarter of 2024.
This activity is interesting given that most analysts on Wall Street are bullish on Microsoft Corporation (NASDAQ:MSFT) in light of the AI boom. For example, Evercore ISI analyst Kirk Materne has an Outperform rating on the shares with a price target of $500. In a recent investor note, the analyst noted that the tech giant had delivered solid fiscal Q4 results with strong commercial bookings, but shares were down slightly as Azure growth came in at the low end of expectations and Q1 Azure guidance was also a bit lower than expected.
5. Seagate Technology Holdings plc (NASDAQ:STX)
Number of Hedge Fund Holders: 44
Duquesne Capital’s Stake: $181,268,000
Seagate Technology Holdings plc (NASDAQ:STX) engages in the provision of data storage technology and infrastructure solutions in Singapore, the United States, the Netherlands, and internationally. The rise of solid state drives over the past few years had turned attention away from hard disk drives, one of the most-selling products of the company. However, the management of the tech firm believes that the AI data center can prove to be beneficial for the shares in the long term. In the recent earnings call, the company claimed that over the next several years, the volume of AI-generated content was expected to increase and also shift towards more imagery and videos, which can be up to 1,000 times larger than text. These trends, per the firm, would bode well for HDD demand over the long term, as HDDs remained the most cost-effective means to house and subsequently use mass capacity data.
There seems to be some truth to these claims. According to consensus estimates, the revenue growth for Seagate Technology Holdings plc (NASDAQ:STX) is forecast to climb by 37% next year and 13% in fiscal 2026. The impact on earnings over this time period is even more noticeable with the forecast for 2024 EPS of $0.96, growing to $5.64 by next year. Investment advisory Morgan Stanley has an Overweight rating on the shares with a price target of $133.
4. Natera, Inc. (NASDAQ:NTRA)
Number of Hedge Fund Holders: 60
Duquesne Capital’s Stake: $213,860,000
Natera, Inc. (NASDAQ:NTRA) operates as a diagnostics company that develops and commercializes molecular testing services worldwide. Some of the prominent products of the firm include Panorama, a non-invasive prenatal test that screens for chromosomal abnormalities of a fetus, and Horizon carrier screening test for individuals and couples to determine if they are carriers of genetic variations that cause certain genetic conditions. The firm recently posted earnings for the second quarter of 2024, reporting losses per share of $0.30, beating market expectations by $0.40. The revenue over the period was more than $413 million, up close to 58% year-on-year and surpassing analyst estimates by a handsome $70 million.
Natera, Inc. (NASDAQ:NTRA) is a quality stock in the biotech world, evidenced by Wall Street analysis of the firm. Morgan Stanley analyst Tejas Savant has an Overweight rating on the shares with a price target of $132. Following the earnings report of the firm, the investment advisory noted that the premium multiple on the stock was justified by multiple drivers of near- and long-term estimate upside and a clear line-of-sight to profitable and self-sustaining growth.
3. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Holders: 92
Duquesne Capital’s Stake: $225,717,000
Vistra Corp. (NYSE:VST) operates as an integrated retail electricity and power generation company. Earlier this year, the company purchased Energy Harbor, another energy firm, in a deal worth $3.4 billion. This acquisition has given a significant boost to the guidance numbers of the firm. The company recently confirmed that it was anticipating a contribution of over $900 million in 2025 and over $1.1 billion in 2026 to corporate adjusted EBITDA following the purchase. The utility firm also expects $200 million in run-rate synergies by the end of 2026 as it further integrates operations with Energy Harbor. The nuclear assets of the latter are also important since the AI data center boom is forcing tech giants to turn towards sustainable energy sources for their power needs to please their ESG investors.
Vistra Corp. (NYSE:VST) has thus been earning bullish ratings from analysts on Wall Street. For example, Morgan Stanley recently raised the price target on the stock to $110 from $109 and kept an Overweight rating, highlighting that in July, utilities outperformed the 1.22% return of the benchmark S&P by 560 bps. In the investor note, the advisory further added that the strong and stable free cash flow of Vistra was underappreciated at the current price.
2. Coupang, Inc. (NYSE:CPNG)
Number of Hedge Fund Holders: 62
Duquesne Capital’s Stake: $229,845,000
Coupang, Inc. (NYSE:CPNG) is a South Korea-based ecommerce firm. It has featured in the Duquesne Capital 13F portfolio since the first quarter of 2021. The stake back then consisted of just over 10 million shares with an average price of $46.22. Druckenmiller gradually increased this holding to nearly 23 million at the end of last year. However, since then, the billionaire has been offloading the stock. In the second quarter of 2024, Duquesne Capital reduced the size of this holding by more than half. Even after this sizable reduction, the stake is still the second-largest holding in the portfolio, comprising nearly 8% of the total 13F portfolio.
Expert investment advisors on Wall Street seem to agree with Druckenmiller regarding Coupang, Inc. (NYSE:CPNG) stock. JPMorgan has an Overweight rating on the shares with a $28 price target. In a recent investor note, the advisory mentioned the 140 billion won fine leveled on the firm by authorities in South Korea earlier this year. The fine was imposed for alleged manipulation of search listing algorithms in favor of the own products of the firm. In the note, the advisory noted that the regulatory repercussions for the business may weigh on investor sentiment in the near term.
1. Coherent Corp. (NYSE:COHR)
Number of Hedge Fund Holders: 47
Duquesne Capital’s Stake: $260,098,000
Coherent Corp. (NYSE:COHR) develops, manufactures, and markets engineered materials, optoelectronic components and devices, and optical and laser systems and subsystems for the use in the industrial, communications, electronics, and instrumentation markets worldwide. The fourth quarter earnings report of the firm paints an interesting picture for investors. The revenue for the quarter was $1.31 billion, beating market expectations of $1.28 billion, and even exceeding the upper end of the guidance range, which was $1.3 billion. The revenue grew 9% year-on-year, primarily driven by mid-teens growth in networking. The AI products the company designs and markets are part of this segment.
This AI growth story of Coherent Corp. (NYSE:COHR) has attracted the attention of Wall Street. Following the release of fourth quarter results, B Riley analyst Dave Kang raised the price target on the stock to $86 from $78 and kept a Buy rating, noting that orders for the firm were up in Q4 and were expected to be up again in Q1, with the artificial intelligence cycle providing a significantly long runway.
While we acknowledge the potential of Coherent Corp. (NYSE:COHR) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Coherent Corp. (NYSE:COHR) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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