Why Did Stan Druckenmiller Close His Fund?

Stan Druckenmiller is a billionaire investor who previously ran Duquesne Capital Management. This fund was among the best on Wall Street, averaging returns of 30% per year until Druckenmiller closed it in 2010.

Today, Druckenmiller is still very active in the investing world, though he only manages his own capital instead of taking on clients.

Why did Stan Druckenmiller walk away from one of the most successful hedge funds ever created, and what has he been up to since?

What Did Druckenmiller Himself Say?

Luckily, Druckenmiller himself articulated at least some of the reasons for closing up Duquesne. According to a statement the billionaire investor gave at the time, the reason for closing up the fund largely had to do with the personal toll it was taking on him.

When Duquesne finally shut its doors, Druckenmiller had been on a 30-year streak and was 57 years of age, and claims to have been feeling the pressures of managing billions of dollars for other people. He has mentioned in subsequent interviews that the inability to escape on vacation with family due to work emergencies was a prime reason for hanging up his gloves, so to speak.

In addition to these personal factors, Druckenmiller had also become frustrated with the performance of his fund in the time period leading up to his retirement from running the fund. Like many hedge funds, Duquesne would experience periods of lower performance between its big wins. These waiting periods and the drawdowns that came along with them began to disappoint investors.

A final concern was that the market’s returns began to outshine Druckenmiller’s for the first time in his career and he admitted to missing several investment opportunities that would have resulted in large returns when the market rebounded. He’s been candid in later years that the the pressures of running the fund began to affect his own performance.

What Does Druckenmiller’s Personal Portfolio Look Like?

Although Druckenmiller closed his fund nearly 15 years ago, he still invests personally through the Duquesne Family Office. This private fund has about $2.9 billion of assets spread across 72 different stock holdings. Nearly half of that total, however, is in just five of the top holdings. Interestingly, none of these five companies are the kind of massive, blue-chip holdings you might expect to find in a Wall Street mogul’s personal portfolio.

Leading the pack is Natera, a DNA testing and cancer screening company that makes up almost 16% of Druckenmiller’s portfolio. Accounting for slightly over 10% is Coupang, an eCommerce company that primarily serves the South Korean market. Third on the list is the Coherent Group, a specialty laser equipment company.

The final two spots among Druckenmiller’s top five are occupied by Woodward and Seagate Technologies. Woodward manufactures control systems for aircraft and industrial engines, while Seagate is a computer hardware maker specializing in high-capacity data storage. Both of these holdings make up a little over 6% of the Duquesne Family Office portfolio.

Druckenmiller is by no means just a stock trader and has actively traded bonds and currencies too. In fact he disclosed that he was actively shorting US bonds and this position made up as much as 20% of his portfolio but he believed Soros would be disappointed he hadn’t placed a larger bet. He clearly expects high national debts and ongoing inflationary pressures to push bond yields up in the future and exert downward pressure on bond prices.

A big advantage of Druckenmiller moving away from managing other people’s capitals is he doesn’t have to lose sleep at night over short-term volatility as he might in days gone by. Instead, he gets to put his eggs into a few baskets that he thinks will deliver excess returns, or alpha, over the long-term. That’s squarely the position his long-term short long duration bond bet falls into.

What’s Druckenmiller Doing Today?

Although Stan Druckenmiller is now over 70, his head for investing seems to be as sharp as ever. Though he hasn’t added any large new positions, he has been buying heavily and adding a number of smaller holdings to his portfolio. Like most of the investments he has made in his lifetime, these new buys appear to be aimed at taking advantage of big picture conditions and broader stock market trends.

He’s also beginning to cut positions in some of his stocks that have started to look overvalued. A recent example is Palantir, which experienced a huge surge in prices on the back of AI forecasts but which now trades at massive price-to-earnings and price-to-sales ratios. Prior to this decision, he had also sold all of his NVIDIA shares for similar reasons but subsequently acknowledged he sold too soon.

Outside of his investing efforts, Druckenmiller is also a very active philanthropist. The Druckenmiller Foundation has made donations ranging from university grants to funding for medical research efforts. It’s worth noting that this foundation had already existed for over 15 years before Duquesne was closed, but Druckenmiller was able to focus much more on his philanthropic efforts after retiring from the fund. In 2009, just one year before closing Duquesne, he donated over $700 million to his foundation.

Ultimately, Stan Druckenmiller was able to trade in the weight of managing money for others in favor of more free time, completely independent investment decisions and the ability to work on his charitable foundation. Given that he was already nearing 60 when the decision to close Duquesne was made and his returns were beginning to lag slightly, Druckenmiller was able to retire slightly early and go out on top in the process. It’s a telling fact that, almost 15 years after Duquesne was officially closed, Druckenmiller is still among the most-watched investors in the US.

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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.