Of all the great sayings about bravery that been stated throughout the centuries, Stanley Druckenmiller probably summed it up best.
"It takes courage to be a pig," the billionaire investor said.
Related: Stanley Druckenmiller forecasted Nvidia's rally; now he has a new target
Bear in mind the first thing Druckenmiller heard when he entered the business world was the old dictum, "Bulls make money, bears make money, and pigs get slaughtered."
But his experience with investor and philanthropist George Soros gave him a different view of the markets, and he wondered if maybe the porkers were on to something.
Druckenmiller managed money for Soros from 1988 to 2000 as the lead portfolio manager for Quantum Fund.
Their most celebrated play was a bet against the British pound in 1992. They “broke the Bank of England,” as commentators put it, reportedly earning a tidy $1 billion.
"Soros has taught me that when you have tremendous conviction on a trade, you have to go for the jugular," he told author Jack Schwager. "It takes courage to be a pig."
Druckenmiller is the former chairman and president of Duquesne Capital, which he founded in 1981 and closed in 2010 when it had over $12 billion in assets.
In 2011, he switched to a family office, establishing the wealth management firm Duquesne Family Office.
Druckenmiller's strategy touts 'investing discipline'
Druckenmiller believes that good investors "are successful not because of their IQ, but because they have an investing discipline."
His impressive track record makes investors eager to see his market activity, and one way to get some insight into how he brings home the bacon is through regulatory filings.
Related: Big names exit Nvidia stock as AI giant stumbles before earnings
Investment funds with more than $100 million in assets must notify the SEC regarding portfolio changes quarterly. The reports, known as 13-F filings, are backdated to the end of the previous quarter.
Back in May, Duquesne lowered its position in semiconductor titan Nvidia (NVDA) by 5.5 percentage points to 3.6% of the portfolio, or $159 million. And it erased its 7.2% position in Nvidia call options.
At that time, Druckenmiller told CNBC that the swift artificial intelligence boom could be overdone in the short run.
“We did cut that and a lot of other positions in late March," he said. "I just need a break. We’ve had a hell of a run. A lot of what we recognized has become recognized by the marketplace now."
Druckenmiller first bought Nvidia shares in the fourth quarter of 2022, admitting that "I didn’t even know how to spell it."
“So, AI might be a little overhyped now but underhyped long term,” he said. “The big payoff might be four to five years from now.”
Druckenmiller sells more Nvidia stock
The second-quarter filing finds that Duquesne unloaded around 1.5 million more Nvidia shares, representing around 88% of the firm's holdings in the stock.
Nvidia's shares soared earlier this year, and the group briefly eclipsed Microsoft (MSFT) to become the most valuable company in the world.
The company's stock is down 4.4% for the quarter after their stunning first-half advance of around 150%, and some of Wall Street's biggest investors appear to be looking elsewhere for their exposure to AI stocks.
TheStreet Pro’s Stephen Guilfoyle said in his latest column that the “two greatest investors/traders of my long career on Wall Street have been Warren Buffett and Stanley Druckenmiller.”
He noted that Druckenmiller reduced his long position in Apple (AAPL) and Microsoft (MSFT) while completely exiting Facebook parent company Meta Platforms (META) .
Druckenmiller’s sizable bet on small caps, in a broad way, is missing, Guilfoyle added, “as perhaps he feels that trade has come and gone.”
“Like Druckenmiller, I had reduced Nvidia, not during the quarter, but upon its completing the second peak of its summertime double top,” he said. “I added some back on during last Monday's market meltdown.”
Druckenmiller adds new stocks to his portfolio, including MELI
Druckenmiller’s Duquesne reported a new position in Mid-America Apartment Communities (MAA) , a real estate investment trust that acquires multi-family apartments worth $92 million, and in cigarette maker Philip Morris International Inc. (PM) of $90 million.
Earlier this month, Goldman Sachs analysts added Philip Morris to the firm's US Conviction List as part of its August update, according to The Fly.
The firm has a buy rating on the shares with a $126 price target and believes the market is under-appreciating Philip Morris' growth opportunity as the company innovates around its smoke-free alternatives to cigarettes.
These alternatives are more profitable and positions the company well among peers with direct exposure to the U.S., Goldman said.
On Aug 14, Barclays raised the firm's price target on Philip Morris to $130 from $110 and kept an overweight rating on the shares.
Tobacco stocks had a strong Q2 as market multiples are set not on what is happening now, but on what could happen in the terminal year, Barclays said.
More AI Stocks:
- Nvidia stock tumbles in tech slump amid questions over key chip
- Microsoft exec warns of an ongoing problem
- Apple earnings top forecasts, iPhone sales slip ahead of AI launch
The firm rolled forward its price targets by six months and increased multiples by 10%.
Duquesne also bought new stakes in Adobe (ADBE) and Latin American e-commerce and payments company MercadoLibre (MELI) , which were worth about $20 million and $60 million, respectively.
Citi raised the firm's price target on MercadoLibre to $2,200 from $2,000 on Aug. 15 and kept a buy rating on the shares.
Related: MercadoLibre stock price surges on Wall Street after earnings
Even amid a challenging quarter, particularly in Brazil, MercadoLibre managed to accelerate gross merchandise volume and deliver one of the best volume growths in years, the firm said
Citi said that this is the most important takeaway from the company’s second-quarter report and the main reason it elevated sales estimates.
The Uruguay-based company beat Wall Street's second-quarter earnings expectations earlier this month, reporting a profit of $10.48 per share on revenue of $5.1 billion.
Analysts expected earnings of $8.53 per share on revenue of $4.7 billion. The company reported net income of $531 million, up from $262 million a year ago.
Marcos Eduardo Galperin, MercadoLibre's chair, president, and CEO, told analysts during the company’s earnings call that Aug. 2 “marks 25 years since we founded MercadoLibre with the mission of democratizing commerce and financial services in Latin America.
"Over those 25 years, we have built a sustainable company that provides millions of small and medium-sized businesses with the tools they need to compete with larger players," he said.
"We have enabled the shift to online retail by providing tens of millions of consumers with world-class levels of service. And we have included millions of people into the financial system across the region for the first time," Galperin added.
Related: Veteran fund manager sees world of pain coming for stocks
