In this article, we look at why billionaire Stanley Druckenmiller just dumped these 5 stocks from his portfolio. If you want to read our comprehensive analysis of Duquesne Capital’s history, investment philosophy, and hedge fund performance, you can go directly to Billionaire Stanley Druckenmiller Just Dumped These 10 Stocks.
5. Penn National Gaming, Inc (NASDAQ:PENN)
Number of Hedge Fund Shareholders: 38
Penn National Gaming, Inc (NASDAQ:PENN) was the fifth-largest holding that Stanley Druckenmiller’s family office sold out of during Q4 2021, selling off its 417,200 shares that were worth $30.23 million at the end of Q3. That didn’t come as a total surprise, as Duquesne sold off over half its stake in the company during Q3 before finishing the job in Q4.
Hedge fund ownership of Penn National Gaming, Inc (NASDAQ:PENN) has fallen by 23% over the past year and a half, as several other prominent hedge funds like Arrowstreet Capital and Maverick Capital also sold off their stakes during Q4.
Penn National Gaming, Inc (NASDAQ:PENN) shares peaked in the first quarter of 2021, as the fervor over the broadening legalization of online gambling and sports betting reached a fever pitch. They’ve since fallen by over 60%.
As Baron Funds’ Baron Small Cap Fund noted in its Q4 2021 investor letter, investors have somewhat soured on these companies in recent quarters as aggressive promotional efforts have cut into earnings and margins. Nonetheless, Baron Funds remains a fan of both the stock and industry’s long-term potential. You can read its comments below:
“Shares of Penn National Gaming, Inc. fell in the quarter, as stocks of online gaming companies were under pressure. Sports betting and i-gaming are rolling out with great fanfare and success across the country; however, investors seem concerned about competition and margins. Most participants are spending heavily on marketing and promotions, which is cutting into margins. We see this as worthy investment in customer acquisition at a moment in time when revenues are just building. We continue to believe that online sports betting and gaming will be enormous industries, that that Penn will carve out a modest share. We think the business will have high margins as it matures. We believe we are underwriting both businesses conservatively and see much upside in the long term. Penn has a strong, well-performing brick and mortar casino business that we believe is worth close to its present stock price, so though we are taking a wait-and-see approach to its sports betting offering, there should be little downside from here.”
4. Zoom Video Communications, Inc. (NASDAQ:ZM)
Number of Hedge Fund Shareholders: 48
17% of Zoom Video Communications, Inc. (NASDAQ:ZM)’s hedge fund shareholders sold out of the stock during Q4, including Stanley Druckenmiller’s firm, which sold off its 117,690 shares a quarter after purchasing them.
Zoom Video Communications, Inc. (NASDAQ:ZM) was one of the biggest pandemic winners of 2020, with shares gaining over 400%. They’ve since fallen by 63%, giving back the vast majority of those gains as the effects of the pandemic begin to subside and competition in the video conferencing and remote workspaces heats up. Zoom shares have also fallen victim to the investor flight from growth stocks in recent months.
That could make them a bargain at current prices, as the company’s performance hasn’t warranted the mass selloff. Zoom Video Communications, Inc. (NASDAQ:ZM) shares now trade at just 10x sales and the company has doubled its revenue and boosted its free cash flow by 59% during a period in which its shares have sunk by 78%.
3. Moderna, Inc. (NASDAQ:MRNA)
Number of Hedge Fund Shareholders: 43
Moderna, Inc. (NASDAQ:MRNA) is another stock that hedge funds soured on during Q4, as 12% of its former shareholders sold off the stock, including Duquesne Capital. The family office sold off all 85,971 shares it owned from the stake it built-in Q2 2021.
It’s not just hedge funds who think Moderna, Inc. (NASDAQ:MRNA) has become overvalued either, as our list titled Analysts Think These 5 Stocks Are Overvalued featured the biotech company. In fact, Bank of America analyst Geoff Meacham called Moderna’s shares “ridiculously” overvalued back in August and expected the stock to pull back by 75%, which it’s nearly done in the months since, sliding by 61%.
Nonetheless, Carillon Tower Advisers was a fan of Moderna, Inc. (NASDAQ:MRNA) even at its much higher valuation back in Q3, having this to say about the company in its Q3 2021 investor letter:
“Moderna is a biotechnology company pioneering messenger RNA (mRNA) therapeutics and vaccines. The stock proved to be an impressive contributor once again in the quarter, as investors continue to evaluate the potential for future growth driven primarily by the firm’s revolutionary COVID-19 vaccine. Strong global demand for the vaccine may persist for the foreseeable future in order to maintain immunity as well as provide protection against any additional future variants. The potential for the firm’s mRNA technology to be used in a number of other use cases, specifically influenza, could also provide an additional tailwind for future growth.”
2. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Shareholders: 224
As noted previously, Druckenmiller unloaded his position in Meta Platforms, Inc. (NASDAQ:FB) during Q4, selling off 105,883 shares of the social media giant and metaverse pioneer. He wasn’t the only one, as a net total of 24 hedge funds dumped their stakes in FB during the quarter just ahead of the stock losing the most value in a single day, $230 billion, in stock market history. Shares are down by 37% in 2022.
Not only has Meta Platforms, Inc. (NASDAQ:FB)’s foray into the metaverse been an extremely costly one for the company, losing $10 billion in Q4, but iOS privacy changes have also hammered ad revenue. The company also suggested that it may have to shut down Facebook and Instagram in Europe if proposed regulations in the region that would prohibit companies from sending Europeans’ data across the Atlantic are enacted.
Nonetheless, Weitz Investment Management didn’t appear to be too concerned about potential regulatory challenges hurting the long-term outlook for Meta Platforms, Inc. (NASDAQ:FB), having this to say about the matter in its Q4 2021 investor letter:
“A couple of other platform companies deserve a mention as well. Meta Platforms and Alphabet have both been under regulatory scrutiny that has affected their valuations. The threats of punitive action are real, but we have tried to be imaginative about how onerous any fines, rule changes or forced divestitures might be, and we believe that the fiveyear outlook for each is well above average under almost any scenario. So, we include these two in the list of the under-appreciated.”
1. Intuit Inc. (NASDAQ:INTU)
Number of Hedge Fund Shareholders: 82
Topping the list is Intuit Inc. (NASDAQ:INTU), which was the most valuable holding sold off by Stanley Druckenmiller’s firm during Q4 2021. The family office sold all 87,149 shares it owned on September 30, which were valued at $47.02 million at that time.
In contrast, the hedge fund ownership of Intuit Inc. (NASDAQ:INTU) jumped by 28% during the quarter. Thus far, Druckenmiller appears to have had the right idea, as shares of the financial software and services company have slid by 24% in 2022.
Intuit Inc. (NASDAQ:INTU) shares have partly been done in this year by the flight from growth stocks and especially fintech stocks due to rising interest rates. And despite a 52% jump in its fiscal Q1 2022 revenue, its full-year guidance calls for a more modest 26% to 28% jump even when factoring in the company’s recent $12 billion acquisition of Mailchimp.
That doesn’t appear to be cutting it with investors right now given the 53x free cash flow premium that the stock was trading at towards the end of last year. Druckenmiller too has decided to look elsewhere for more promising near-term investments.
You can also take a peek at the 10 Stocks to Invest In According to Bart Baum’s Ionic Capital and Billionaire Andreas Halvorsen Is Selling These 10 Stocks.
