In this article, we discuss 10 value stock picks of billionaire Stanley Druckenmiller in 2022. If you want to see more value picks in his portfolio, click Billionaire Stanley Druckenmiller’s 2022 Portfolio: 5 Value Stock Picks.
Billionaire Stanley Druckenmiller’s rather concentrated Q1 portfolio, comprising only 51 stocks, is a blend of value and growth plays. Investing primarily in the materials, utilities and telecommunications, energy, information technology, finance, and consumer discretionary sectors, Druckenmiller’s $2.30 billion portfolio mostly consists of personal investments, as he has been running Duquesne Capital as a family office since 2010.
Duquesne Capital was founded in 1981 by Stanley Druckenmiller, who remained the president and chairman of the fund until 2010, maintaining capital and assets for clients. The billionaire purchased 18 new stocks in Q1 2022, adding notable names like Netflix, Inc. (NASDAQ:NFLX), Workday, Inc. (NASDAQ:WDAY), and Phillips 66 (NYSE:PSX) to his portfolio. Whereas, Druckenmiller disposed of 16 securities, including Lockheed Martin Corporation (NYSE:LMT), Alphabet Inc. (NASDAQ:GOOG), and Airbnb, Inc. (NASDAQ:ABNB).
According to the 13F filings, some of the most notable stocks in billionaire Stanley Druckenmiller’s Q1 2022 portfolio were Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Chevron Corporation (NYSE:CVX). However, we discuss the value stock picks of the billionaire in this article.
Our Methodology
We assessed the Q1 portfolio of billionaire Stanley Druckenmiller, selecting the value stocks in which he had the highest stakes. We have mentioned the P/E ratio for each company as of May 18, picking securities with a price to earnings ratio of under 20.
Billionaire Stanley Druckenmiller’s 2022 Portfolio: Value Stock Picks
10. Freeport-McMoRan Inc. (NYSE:FCX)
Number of Hedge Fund Holders: 66
P/E Ratio as of May 18: 10.49
Freeport-McMoRan Inc. (NYSE:FCX) was incorporated in 1987 and is headquartered in Phoenix, Arizona. The company mines for copper, gold, molybdenum, silver, and other metals in North America, South America, and Indonesia. Stanley Druckenmiller’s hedge fund owned 4.8 million shares of Freeport-McMoRan Inc. (NYSE:FCX) in Q1 2022, worth $240.5 million, representing 10.43% of the total 13F holdings.
On April 21, Freeport-McMoRan Inc. (NYSE:FCX) reported earnings for the first quarter of 2022. The company posted an EPS of $1.07, beating consensus estimates by $0.15. Revenue for the period grew 36.14% year-over-year to $6.60 billion, outperforming Street forecasts by $148.02 million.
Freeport-McMoRan Inc. (NYSE:FCX) declared on March 23 a $0.15 per share quarterly dividend, up from the prior dividend of $0.075. The dividend was distributed on May 2, to shareholders of record on April 14.
BMO Capital analyst David Gagliano on April 22 maintained an Outperform rating on Freeport-McMoRan Inc. (NYSE:FCX) but lowered the firm’s price target on the shares to $56 from $62 after its Q1 results. The analyst slashed his FY22 EPS view by 25c to $3.47 to account for expected higher unit costs, though he also sees Freeport-McMoRan Inc. (NYSE:FCX) “remaining well-placed” to benefit from ongoing strength in underlying copper prices.
According to Insider Monkey’s Q4 data, 66 hedge funds were bullish on Freeport-McMoRan Inc. (NYSE:FCX), with collective stakes worth $3.7 billion. In Q1 2022, Ken Fisher’s Fisher Asset Management was a notable shareholder of the company, with 50.75 million shares valued at $2.5 billion.
In addition to Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Chevron Corporation (NYSE:CVX), Freeport-McMoRan Inc. (NYSE:FCX) is one of the most notable stocks to consider according to billionaire Stanley Druckenmiller’s 2022 portfolio.
Here is what Horizon Kinetics has to say about Freeport-McMoRan Inc. (NYSE:FCX) in its Q4 2021 investor letter:
“Those were some ideas about copper demand. Here are some specifics about supply. Global copper mine production in the 10 years from 2005 to 2015 rose 2.45% annually. In the next 5 years, to 2020, it increased by only 0.9% annually. Even ignoring the 2020 pandemic year, for the 4 years from to 2019, the expansion rate was 1.66%. We already have the historical context for this: the commodity price collapse prior to 2015, from a position of excess capacity.
What producers must do in that situation, because they have high fixed costs and debt expense, is curtail their exploration and development expenditures and reduce operating costs. They rely on existing mines, instead, and on their highest-grade ores and lowest-cost production. They might not actually reduce current production, but they aren’t replacing the reserves that are being slowly drawn down. You can see this at work at the individual company level.
Freeport-McMoRan will illustrate. It is the world’s third-largest copper producer, closely following Chile’s Codelco and Australia’s BHP Group. In 2014, even though Freeport sold more copper than the prior year, its revenues dropped by over 25%, and it went from $4.8 billion of operating earnings (a 22% margin) to a $(0.2) billion loss. The company’s capital expenditures peaked in 2014 at $3.86 billion and will be about $1.72 billion in 2021, meaning the company is spending 55% less now than it was seven years ago. In inflation-adjusted terms, it’s spending 61% less today than seven years ago…” (Click here to see the full text)
9. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 53
P/E Ratio as of May 18: 15.78
Chevron Corporation (NYSE:CVX) is an American oil and gas company that operates via Upstream and Downstream segments. The company markets and distributes crude oil, natural gas, refined products, and lubricants. Stanley Druckenmiller’s Duquesne Capital held 964,880 shares of Chevron Corporation (NYSE:CVX), worth over $157 million, representing 6.81% of the Q1 portfolio. The hedge fund boosted its stake in Chevron Corporation (NYSE:CVX) by 18% in the first fiscal quarter of 2022.
On April 27, Chevron Corporation (NYSE:CVX) declared a $1.42 per share quarterly dividend, in line with previous. The dividend is payable on June 10, to shareholders of the company as of May 19. Chevron Corporation (NYSE:CVX)’s dividend yield on May 18 stood at 3.38%.
Chevron Corporation (NYSE:CVX) reported earnings for Q1 on April 29, posting an EPS of $3.36, missing estimates by $0.08. The revenue grew almost 70% year-over-year to $54.37 billion, outperforming analysts’ predictions by $812.65 million.
On May 2, Credit Suisse analyst Manav Gupta raised the price target on Chevron Corporation (NYSE:CVX) to $190 from $180 following quarterly results. The analyst kept an Outperform rating on the shares.
According to Insider Monkey’s Q4 data, 53 hedge funds were bullish on Chevron Corporation (NYSE:CVX), up from 51 funds in the earlier quarter. Warren Buffett’s Berkshire Hathaway is a leading shareholder of the company, with a position worth approximately $26 billion.
Here is what ClearBridge Investments Large Cap Value Strategy has to say about Chevron Corporation (NYSE:CVX) in its Q1 2022 investor letter:
“The energy sector, which led a strong market in 2021, generated even more dramatic relative performance in the quarter, advancing 39% and leading the benchmark Russell 1000 Value Index. Years of restrained investment in the energy sector, combined with a strong post-pandemic recovery, contributed to the higher commodity prices. The upward pressure escalated with the Russian invasion of Ukraine. Our energy holding Chevron (NYSE:CVX) benefited from higher commodity prices and was among the top contributors to first-quarter performance.”
8. Coterra Energy Inc. (NYSE:CTRA)
Number of Hedge Fund Holders: N/A
P/E Ratio as of May 18: 14.27
Coterra Energy Inc. (NYSE:CTRA) was incorporated in 1989 and is headquartered in Houston, Texas. It operates as an independent oil and gas company, producing oil, natural gas, and natural gas liquids in the United States. Stanley Druckenmiller added Coterra Energy Inc. (NYSE:CTRA) to his Q1 2022 portfolio by purchasing 1.77 million shares, worth $47.8 million. The stock represents 2.07% of the total 13F holdings.
Coterra Energy Inc. (NYSE:CTRA) posted its Q1 financial results on May 2, reporting earnings per share of $1.01, beating market estimates by $0.19. Revenue for the period grew 265.25% from the prior-year quarter, but missed analysts’ forecasts by $150.77 million.
On April 25, Susquehanna analyst Biju Perincheril downgraded Coterra Energy Inc. (NYSE:CTRA) to Neutral from Positive on April 25, while raising the price target to $32 from $26. The analyst thinks exploration and production companies “should continue to be a bright spot in the market”, with higher capital returns driving stock performance. However, he cited valuation for the Coterra Energy Inc. (NYSE:CTRA) downgrade, given the stock’s outperformance year-to-date.
In Q1 2022, Jacob Mitchell’s Antipodes Partners held a prominent position in Coterra Energy Inc. (NYSE:CTRA), with 6.5 million shares worth $175.75 million.
Here is what Diamond Hill Small Cap Fund has to say about Coterra Energy Inc. (NYSE:CTRA) in its Q4 2021 investor letter:
“Other bottom contributors included Coterra Energy. Coterra is the result of a merger-of-equals between our prior holding Cimarex Energy and Cabot Oil & Gas—the largest natural gas producer in the Northeast. The combined company has solid, low cost of production assets and a good balance sheet. During the quarter, share prices fell as concerns over additional waves of COVID-19 pressured oil and gas prices lower.”
7. Pioneer Natural Resources Company (NYSE:PXD)
Number of Hedge Fund Holders: 43
P/E Ratio as of May 18: 16.61
Pioneer Natural Resources Company (NYSE:PXD) is a Texas-based independent oil and gas exploration and production company, supplying oil, natural gas liquids, and natural gas. Duquesne Capital added Pioneer Natural Resources Company (NYSE:PXD) to its Q1 portfolio by buying 130,375 shares, worth $32.5 million, representing 1.41% of the total 13F securities.
On May 4, Pioneer Natural Resources Company (NYSE:PXD) posted earnings for Q1, reporting an EPS of $7.74, beating market estimates by $0.41. Revenue for the quarter climbed 152.54% year-over-year to $6.17 billion, topping Street consensus by $186.50 million.
Pioneer Natural Resources Company (NYSE:PXD) declared a quarterly base and variable dividend of $7.38 per share on May 5. The dividend is distributable on June 14, to shareholders of the company as of May 31.
Raymond James analyst John Freeman on April 25 maintained a Strong Buy rating on Pioneer Natural Resources Company (NYSE:PXD) and raised the price target on the stock to $400 from $285. The analyst believes that Pioneer Natural Resources Company (NYSE:PXD) offers exposure to best-in-class assets, a fortress balance sheet, and a commitment to capital efficient growth and shareholder returns.
In Q4 2021, a total of 43 hedge funds were bullish on Pioneer Natural Resources Company (NYSE:PXD), compared to 48 funds in Q3. At the end of the first quarter of 2022, Gavin M. Abrams’ Abrams Bison Investments held a notable stake in the company, with 598,000 shares worth $149.5 million.
In addition to Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Chevron Corporation (NYSE:CVX), Pioneer Natural Resources Company (NYSE:PXD) is one of the prominent picks of billionaire Stanley Druckenmiller in 2022.
Here is what Clearbridge Investments Mid Cap Growth Strategy has to say about Pioneer Natural Resources Company (NYSE:PXD) 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.”
6. British American Tobacco p.l.c. (NYSE:BTI)
Number of Hedge Fund Holders: 18
P/E Ratio as of May 18: 11.81
British American Tobacco p.l.c. (NYSE:BTI) is a London-based provider of tobacco and nicotine products. Billionaire Stanley Druckenmiller owned 120,950 shares of British American Tobacco p.l.c. (NYSE:BTI) in Q1 2022, worth $5 million. With a price to earnings ratio of 11.81, British American Tobacco p.l.c. (NYSE:BTI) is a notable value stock in the billionaire’s portfolio.
On February 17, British American Tobacco p.l.c. (NYSE:BTI) declared a $0.735 per share quarterly dividend, a 1.4% increase from its prior dividend of $0.725. The dividend was distributed on May 9. As of May 18, British American Tobacco p.l.c. (NYSE:BTI) delivers a dividend yield of 8.45%.
JPMorgan analyst Jared Dinges raised the price target on British American Tobacco p.l.c. (NYSE:BTI) to 4,000 GBp from 3,550 GBp and maintained an Overweight rating on the shares on March 24.
According to Insider Monkey’s Q4 data, 18 hedge funds held long positions in British American Tobacco p.l.c. (NYSE:BTI), up from 9 funds in the last quarter. Rajiv Jain’s GQG Partners disclosed a major British American Tobacco p.l.c. (NYSE:BTI) position in Q1 2022, worth $1.2 billion.
Here is what Motiwala Capital has to say about British American Tobacco p.l.c. (NYSE:BTI) in its Q4 2021 investor letter:
“British Tobacco (NYSE:BTI) is one of the largest tobacco companies in the world. In 2021, BTI should have generated $37B in revenues and $10B in net income. The company is paying down debt while continuing to invest in new categories. BTI pays a high dividend payout that is well covered by free cash flow. BTI traded at 10 PE and 8% yield at purchase. The shares should appreciate as EPS grows, company pays down debt and continues to increase dividends.”
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Disclosure: None. Billionaire Stanley Druckenmiller’s 2022 Portfolio: 10 Value Stock Picks is originally published on Insider Monkey.
