Billionaire Stanley Druckenmiller’s Duquesne Family Office portfolio is always worth watching for investing ideas and to learn the strategies used by one of the top investors of the last several decades.
In Q1, over 1 million shares of digital signature software business DocuSign (NASDAQ:DOCU) appeared as a new position on Duquesne’s 13F.
Why did Stan Druckenmiller buy DocuSign, and is the stock still worth a look today?
Druckenmiller’s History With DocuSign
Although the shares Druckenmiller bought in Q1 represented a new position, he has bought and sold DOCU shares before.
In 2019 and again in 2020, Druckenmiller bought up DocuSign and then quickly sold it. In 2019, his profits on the turnaround were modest. In 2020, however, he was able to buy at an average price of about $126 and sell them the same year for about $208.
As such, it seems that Druckenmiller tends to view DOCU as a short-term asset to buy while it’s undervalued and sell when he judges it to be fully valued.
It’s worth noting that the 2025 purchase was much larger than the ones in 2019 and 2020. While this could indicate a more long-term strategic role for the stock in the Duquesne portfolio, it’s also possible that Druckenmiller simply sees it as trading below its fair value again
DocuSign’s Top Line Up 8%
A look at DocuSign’s numbers shows several positives that may have attracted Druckenmiller to the stock.
While Q1’s earnings were released after Druckenmiller had started buying DOCU, they offer a fairly good glimpse of DocuSign’s overall financials. During the quarter, DocuSign’s revenues rose 8 percent against the previous year to $763.7 million.
Adjusted earnings per share were $0.90, compared to an adjusted EPS of $0.82 in the year-ago quarter.
DocuSign is also doing quite well when it comes to profitability. On a trailing 12-month basis, the business has achieved a net margin of 36.5 percent and a return on invested capital of 60.8 percent.
Free cash flow remained fairly stable on a year-over-year basis in Q1, but it’s worth noting that management is allocating some of that cash to share buybacks.
In Q1, DocuSign’s repurchase authorization was raised by $1.0 billion to a remaining total of $1.4 billion. During Q1, DocuSign bought back a little over $183 million of its own shares.
Druckenmiller is also famous for picking stocks on the basis of big picture trends, something that might well have driven his decision to buy DocuSign.
The firm commands a roughly two-thirds share of the digital signature market, so it’s a clear leader in a space that will likely see very high levels of forward growth as more and more business is conducted digitally.
By some estimates, this market will grow at a CAGR of over 40 percent through 2032, eventually reaching a total size of $118 billion. Given its dominant position, DocuSign will very likely be a prime beneficiary of these trends over the next several years.
A final piece of the puzzle could come in the form of DocuSign leaning into AI technology to enhance its business.
Druckenmiller already has a far more direct play on AI in his portfolio in the form of Taiwan Semiconductor Manufacturing.
DocuSign, however, could be another case in which AI can be applied to an already successful business to great effect.
The business is currently building AI-powered contract agents that are expected to launch this year, among other AI features that could help DocuSign expand its already impressive moat.
Is DOCU Undervalued?
There are some fairly good arguments to be made that DocuSign is already undervalued even after rising more than 47 percent in the last year.
Shares of DOCU trade at 14.2 times earnings and 17.3 times operating cash flow. The price-to-sales ratio is a bit more typical of a high-growth tech business, but it’s still not entirely out of line at 5.2.
Analysts are also bullish on DOCU. The average price forecast for the stock is $88.80, about 18 percent higher than the last price of $75.25.
Why Did Druckenmiller Buy DocuSign?
Druckenmiller bought DocuSign because it is an undervalued, profitable business with a leadership position in an industry that is currently experiencing massive growth.
With the tailwinds of the digital signature market expected to keep up at a high pace well into the next decade, DocuSign appears to be at the leading edge of the ongoing move of business to the online space. This is the kind of trend that Druckenmiller likes to gain exposure to, and DocuSign likely offers an opportunity in that space with a very strong moat.
Beyond being an extremely talented macro investor, Druckenmiller also has a keen eye for value. This is evident enough from his last foray into DocuSign, when he was able to realize a gain of about 65 percent in under a year by buying the stock when it was undervalued and then selling once the market corrected to a fairer valuation.
With DocuSign once again looking like it might be undervalued, Druckenmiller may be returning to a business he already knows well in order to capture value in it again on a larger scale.
Cumulatively, DocuSign appears to have many of the characteristics Stanley Druckenmiller looks for in his investments. The business itself is performing well and offers exposure to a fundamental trend in the way contracts and other documents are signed.
The stock itself is also trading at an appealing valuation, giving Druckenmiller a potential opportunity to once again sell it if the market quickly revises its price upward. Whether DOCU is a short-term or long-term holding for Duquesne, it appears to fit well with Druckenmiller’s well-proven investment strategies.
DocuSign may also be worth a look for today’s investors. With DOCU trading well under $100 per share still, it’s actually a good bit cheaper than the average of $87.65 Druckenmiller paid when he was building his position in Q1. With the business still likely in a good position for future growth, investors may do well to consider DOCU as a potential long-term holding.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.