In May, billionaire Stanley Druckenmiller (who formerly managed Duquense Capital and served as a portfolio manager for George Soros) filed his 13F for the first quarter of 2013. Despite the age of this information, we’ve found that there are a couple ways to use 13Fs. First of all, we’ve found that it’s possible to use these filings to develop investment strategies; for example, the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year (learn more about our small cap strategy). We can also compare the most recent filing to the previous one in our database to see which stocks fund managers added to their portfolio last quarter. Read on for our quick take on Druckenmiller’s five largest new holdings from the filing or see the full list of stocks he reported owning.
According to the 13F, Druckenmiller initiated a position of 2.3 million shares in News Corp (NASDAQ:NWSA). The company is scheduled for a breakup, and we’ve noticed a number of billionaires buying the stock ahead of that event. Spinouts often increase shareholder value because management of the spinout and the parent company become better able to focus on operations (learn more about investing in spinouts), and some investors have suggested that a similar result could occur from the News Corp (NASDAQ:NWSA) breakup. In addition, the company as it currently stands is not that expensive anyway with a forward P/E of 16.
Another energy stock among Druckenmiller’s new stocks picks was offshore driller Noble Corporation (NYSE:NE); the filing showed a little over 1 million shares in his portfolio. Revenue and earnings both rose about 25% in Noble Corporation (NYSE:NE)’s most recent quarter compared to the same period in the previous year. While current market prices already include some future growth (the trailing P/E is 18), analysts think investors are underestimating the company- their projections imply a forward earnings multiple of only 8. Point State Capital, founded by Sean Cullinan and many of Druckenmiller’s other former Duquesne portfolio managers, was another major shareholder in the stock.
The billionaire bought about 230,000 shares of Goldman Sachs Group Inc (NYSE:GS) between January and March of this year. As with many megabanks, Goldman Sachs Group Inc (NYSE:GS)’s earnings multiples are low- it trades at 11 times earnings whether we consider trailing results or forecasts for 2014. Business has been about flat, but it’s still cheap enough to be a potential value play and we’d be quite interested in comparing the bank to its peers. There is a small premium to book value, with a P/B ratio of 1.1. Also reporting a new position in Goldman Sachs Group Inc (NYSE:GS) for last quarter was Ken Heebner’s Capital Growth Management (research more stocks Heebner was buying).
Rounding out our list of Druckenmiller’s largest new picks is $85 billion market cap pharmaceutical company Gilead Sciences, Inc. (NASDAQ:GILD). Gilead Sciences, Inc. (NASDAQ:GILD) is another company experiencing rapid growth, with earnings rising over 60% in the first quarter of 2013 versus a year earlier, with lower but still respectable top-line growth of 11%. With the stock price more than doubling in the last year, however, the stock is valued at trailing and forward P/Es of 29 and 18 respectively, and so the company must continue to improve to justify the current valuation.
Disclosure: I own no shares of any stocks mentioned in this article.
