Mixed Q1 Performance for Stanley Druckenmiller

Billionaire Stanley Druckenmiller is among the few titans on Wall Street who saw the opportunity to short China as early as 2013, well ahead of his peers and the rest of the market. Considering that Chinese equity markets have plummeted heavily this year, it won’t be a surprise if Mr. Druckenmiller’s Duquesne Family Office (formerly Duquesne Capital) reaps large profits from whatever short positions it has (which are not disclosed in filings). However, the performance of the family office’s long positions has been rather subdued this year. Analysis done by Insider Monkey of Duquesne Family Office’s 13F holdings in companies worth at least $1 billion shows that the 12 long positions held by the firm as of December 31 delivered a weighted average return of 0.3% during the first quarter. In this post, we will be go through the top five stock picks of the firm as of the end of 2015 and analyze their performance so far this year.

We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).

#5 Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP)

 – Shares Owned by Duquesne Family Office (as of December 31): 772,300

 – Value of Holding (as of December 31): $35.78 million

Ctrip.com is a Chinese stock that Mr. Druckenmiller likes, despite his bearish view on the country’s overall economic health. Duquesne Family Office increased its stake in Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) by 61% during the fourth quarter. However, like most other Chinese stocks, shares of Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) are trading in the red this year, with a year-to-date decline of nearly 4%. On March 16, the company reported its fourth quarter earnings, declaring EPS of $0.11 on revenue of $440 million, topping analysts’ expectations of loss of $0.05 per share on revenue of $430 million. Most analysts who cover the stock currently are bullish on it, citing the growth in China’s travel market and the economic policy shift in the country. However, some analysts are also concerned about the high level of debt on the company’s balance sheet and large operating losses at its subsidiary Qunar. Kenneth Tropin‘s Graham Capital Management increased its stake in Ctrip.com International, Ltd. by 31% to 15 million shares during the fourth quarter and was the largest shareholder of the company in our database at the end of 2015.

#4 Raytheon Company (NYSE:RTN)

 – Shares Owned by Duquesne Family Office (as of December 31): 417,800

 – Value of Holding (as of December 31): $52.03 million

Raytheon Company (NYSE:RTN) was a new addition to Duquesne Family Office’s equity portfolio during the fourth quarter. Raytheon Company (NYSE:RTN)’s stock has largely been range-bound this year and is currently up by 3.64% year-to-date. The defense company faced a minor setback in December after the Pentagon announced that it will look for other options if the performance of the company’s ground control system for GPS satellites fails to improve. On April 13, U.S. Deputy Secretary of Defense Robert Work stated that more data is needed in order for him to be confident in the completion of the company’s delayed project. On the same day, Raytheon received a contract worth $1 billion from the U.S. Navy to develop 15 new jammers for EA-18G Growler aircraft. Analysts who track the company have appreciated its acquisitions in the intelligence and cyber warfare spaces and believe that it will continue to deliver stellar returns to shareholders through a combination of EPS growth and its long-term share repurchase program. Andrew Sandler‘s Sandler Capital Management initiated a stake in Raytheon Company during the fourth quarter, purchasing 119,500 shares of the company.

The performance of Mr. Druckenmiller’s top three equity holdings is discussed on the next page.

#3 Microsoft Corporation (NASDAQ:MSFT)

 – Shares Owned by Duquesne Family Office (as of December 31): 1.16 million

 – Value of Holding (as of December 31): $64.63million

Moving on, Duquesne Family Office reduced its stake in Microsoft Corporation (NASDAQ:MSFT) by 17% during the fourth quarter. Shares of Microsoft Corporation (NASDAQ:MSFT) had enjoyed a strong rebound from mid-February through mid-April after a weak start to the year, but gave up that momentum on April 21 after a disappointing third quarter of fiscal year 2016 earnings report was released by the company. The software behemoth had been expected to deliver EPS of $0.64 on revenue of $22.09 billion for the quarter, while the company actually pulled in $0.62 per share in earnings on $22.10 billion in revenue. After technology tracking companies Gartner and IDC published reports revealing that PC sales in the first quarter of 2016 were down by around 10% year-over-year, investors have grown concerned that Microsoft could experience tepid growth, which appears to have been confirmed by the company’s modest guidance for the fiscal fourth quarter. Microsoft expects revenue of $21.7 billion-to-$22.4 billion for the final quarter of its 2016 fiscal year, while analysts had been predicting a much loftier $23.1 billion. During the first quarter of 2016, Ray Carroll‘s Breton Hill Capital reduced its stake in Microsoft by 21% to 27,380 shares.

#2 Amazon.com, Inc. (NASDAQ:AMZN)

 – Shares Owned by Duquesne Family Office (as of December 31): 190,000

 – Value of Holding (as of December 31): $128.42 million

Duquesne Family Office initiated its stake in Amazon.com, Inc. (NASDAQ:AMZN) during the third quarter and nearly doubled it during the fourth quarter. Unlike last year when Amazon.com, Inc. (NASDAQ:AMZN)’s stock had a dream run, it fell aggressively in the first few weeks of this year and still trades down slightly for the year, despite a big boost after the company’s latest earnings report. Amazon delivered a monster first quarter, with revenue of $29.10 billion and EPS of $1.07, the latter of which shattered analysts’ estimates. Amazon Web Services was particularly impressive, with the division’s revenue soaring by 64% year-over-year to $2.56 billion during the quarter, while operating income leapt by 170% to $604 million, accounting for an impressive 56% of the company’s income during the period. Billionaire Ken Fisher lifted his fund’s stake in Amazon by 1% to 2.50 million shares during the first quarter.

#1 Facebook Inc (NASDAQ:FB)

 – Shares Owned by Duquesne Family Office (as of December 31): 2.53 million

 – Value of Holding (as of December 31): $264.84 million

Despite Duquesne Family Office reducing its stake in Facebook Inc (NASDAQ:FB) by 39% during the fourth quarter, the company remained its top stock pick heading into 2016. Shares of the social media giant are continuing on a torrid bull run first started in mid-2013, as they are trading up by over 14% year-to-date. The company recently concluded its F8 Conference, at which its founder and CEO Mark Zuckerberg shared his 10-year plan and discussed the major developments at the company, including the transition of Facebook Messenger as an app platform and its new video service Facebook Live. On April 19, shares of the company rose rapidly in the final few hours of trade after a report emerged revealing that Facebook’s ad partner Kenshoo saw a 9% quarter-over-quarter and 86% year-over-year increase in first quarter social media ad spend by its clients. Shares jumped again on April 28 after Facebook Inc (NASDAQ:FB) reported a big first quarter, which included income more than doubling year-over-year to $1.5 billion, a figure which is actually dwarfed by the site’s impressive 1.65 billion monthly active users, up by 15% from a year earlier. Murray Stahl’s Horizon Asset Management reduced its stake in the company by 17% to 5,489 shares during the January-to-March period.

Disclosure: None