Stanley Druckenmiller Macro and Stock Views
- – Negative On The Euro. Could Go Down to 0.8. 2015
- Likes global and stable consumer brands such as: Unilever, Pernod Ricard or L’Oréal. Recently shifted to cyclical names such as Volkswagen, BMW, Airbus. 2015
- – Short IBM, Lower Revenue Trend, Low FCF, Bad Business Strategy. (Buybacks – Not Innovation). 2014
- – Expected Correction of Stocks after USA QE end. (OctaFinance wonders if he still expects a correction after the Eurozone launched its own QE.). 2014
- – The USA bond market could Crash around 2020, if the USA doesn’t address its Spending and Entitlement Problems
- – Long USA Airlines, Aluminium Producers. (Big Wins). 2013, 2014
Stanley Druckenmiller Bio
Although he is not as popular as his fellow billionaires Warren Buffet and Bill Gates in the social circles, Stanley Druckenmiller is perhaps one of the best billionaires in America. In the business world he is known as one of the best hedge fund managers of all time having been successful in all business ventures he undertook.
Stanley Druckenmiller made his money trading as a hedge fund manager. He formed his own establishment, Duquesne Capital in 1981 which he was chairman and manager for quite some time before closing it in 2010. More on that later. At the time of its closure the fund had a whopping $12 billion in assets, the envy of other hedge funds.
Looking at his personal life, Stanley Druckenmiller grew up simple, just like the kids next door. He was born in Pittsburgh, Pennsylvania, in 1953 to Anne and Stanley Thomas Druckenmiller. He grew up as a suburban kid in Philadelphia, before moving with his father to New Jersey after his parents divorced.
He attended the prestigious Collegiate School, Richmond, Virginia before pursuing a Bachelor of Arts degree in English and Economics at the Bowdoin College.
While pursuing his PH.D in economics at the University of Michigan, Druckenmiller decided to drop out of his course, to take up a position as an oil analyst at Pittsburgh National Bank in 1977.
His choice of career proved to be a good one as he excelled his first job. Below we look closely at his professional career to understand how this young man made it so quickly in the tricky investment market.
Personally, Druckenmiller is a father of three daughters with wife, Katherine Biggs. He met Katharine while consulting at Drefus, then; she was the securities analyst manager at the firm.
Young Stanley’s decision to take up a management trainee at the Pittsburgh National bank molded his career in Finance. He became so good at it that in a year’s time he was appointed head of the bank’s equity research group at the tender age 27.
Having skills and experience in finance at hand, Stanley left Pittsburgh National Bank to form his own firm, Duquesne Capital Management.
While still managing his own firm Duquesne Capital, Stanley Druckenmiller accepted a position to consult for Dreyfus Fund in 1985. There was an agreement with Drefus that he can keep working at both firms, if he split his time evenly.
A year later he had to move from New York permanently to Pittsburgh after Dreyfus made him head of fund following his successful returns that brought good returns on investment at Drefus.
But his best years were yet to come. In 1988, Stanley Druckenmiller made headlines when he and George Soros’s firm Quantum Fund shorted the British sterling pound-a unique position that reportedly made them a billion in profit in that year alone. It was Stanley’s idea and analysis to short it.
This quick piece of success brought great respect to Mr. Druckenmiller who then became a household name in the investment world. He later left Soros’s fund in 2000 after the company experienced huge loss in technology stocks under his watch. Not seeing a way of getting back Quantum in the good books, Mr. Druckenmiller decided to leave to concentrate on his own ventures. Since then he rejected various consulting offers to concentrate fully on his own, Duquesne Capital.
He however closed the firm in 2010 telling investors that he’d been worn down by the stress of trying to maintain one of the best trading records in the industry while managing an enormous amount of capital at Duquesne Capital.
With his company, he recorded an average annual return of 30%+ percent without any down year, something that is unheard of in the investment industry. His funds only went down for about 5 percent after he announced his retirement.
In 2010, he converted Duquesne Capital to Duquesne Family Office. Today, Stanley manages just only his own money though this family office. He is also investing and allocating money to other managers who worked for him in Duquesne Capital.
Trading Strategy & Research Techniques
Combination of Technical and Fundamental Analysis.
Technical for timing, Fundamental for Targets – Take profits.
Stanley Druckenmiller trading strategy is a top-down approach. His strategies are some of the well sort after in the investment industry. He put into practice the George Soros trading strategy which he learnt while working with George at Quantum. The strategy involves holding a group of stocks as long and another group as short and fully using leverages to trade futures and currency which proved very successful over time.
He uses technical analysis to time the market and enter trades. Stanley focuses on identifying the most important factors that result in big stock price moves as opposed to looking at all the fundamentals.
He never uses valuation to time the market or enter positions. Stanley uses liquidity analysis as well as technical analysis. Valuations only tells him how much an asset or a market could move in case there is a catalyst.
He also used to go for big results if he has a buffer – accumulated profit. Trade slow to 30-40%, and then if you have convictions, go for a 100% year. If you can put together a few near-100% years and avoid losing years, you can achieve really outstanding risk-adjusted returns.
Soros taught him when he is sure of a trader to go big. As Soros said, when you’re right on something, you can’t own enough.
Market Philosophy and Beliefs
Stanley believes that when you earn the right to be aggressive, you should be aggressive. A philosophy reinforced and learned by Soros. He believes that the way to record long-term returns is through preservation of capital and home runs.
Stanley Druckenmiller almost became part owner of Pittsburgh Steelers franchise-which includes Steelers baseball club in 2009. He had been contacted by the team owners, the five sons of Steelers to invest in the team which was then urgently looking for new investors.
However Druckenmiller changed his mind at last minute and did not buy the shares after all, something that really disappointed the owners who were looking forward to having him as partner. Druckenmiller however remains an ardent Steelers fan.
The Great Philanthropist!
When it comes to giving, Stanley Druckenmiller does it big! He reportedly donated $705 million to medical research, education, and anti-poverty foundations in 2009. That same year he gave a $100 million gift to found a Neuroscience Institute at New York University School of Medicine. This generous giving earned the title of “Most generous man of 2009’.
Druckenmiller is the Chairman of the Board of community –based project dubbed Harlem Children’s Zone in Harlem-an organization founded by his former college mate and friend Geoffrey Canada. In 2006, Druckenmiller reportedly contributed $25m to the project.
He has also been an ardent advocate for reforms in taxation, healthcare and social security to ensure intergenerational equity. Stanley Druckenmiller and Geoffrey Canada reportedly made several campaigns and speeches, advocating for these reforms.
Several other projects that the very generous billionaire has contributed to over the years include the building of The Stanley F. Druckenmiller Hall, built in 1997 at his former Bowdoin College which he named after his grandfather. He and his wife are also regular sponsors of the New York City AIDS walk among other charitable organizations in Africa, Asia and beyond. He truly has a golden heart.