In this article, we discuss the 10 best tech stocks to buy according to Stanley Druckenmiller. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Tech Stocks to Buy According to Stanley Druckenmiller.
Stanley Druckenmiller, the chief of New York-based Duquesne Capital, is an American investor and philanthropist who manages more than $3.4 billion in assets through his hedge fund with the top holdings concentrated in the technology and services sectors. Druckenmiller has a net worth of more than $5.6 billion and features on a list of the 500 wealthiest individuals in the world compiled by news publication Forbes. The billionaire has three decades of experience as a money manager, most famously as a partner of legendary investor George Soros.
In 1992, Druckenmiller rose to fame when he shorted the British pound along with Soros and made billions in the process. Druckenmiller founded Duquesne Capital in 1981 and closed the fund for the public in 2010, never having had a losing year on record, a remarkable feat, especially considering the 2009 financial crisis that led to losses for a majority of hedge funds. Druckenmiller was on the list of the highest-earnings hedge fund managers in 2017.
Some of the top technology stocks in the investment portfolio of Duquesne Capital at the end of the second quarter of 2021 were Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), and Alphabet Inc. (NASDAQ: GOOG), among others discussed in detail below. The top five holdings comprise over 40% of the portfolio. The total value of the holdings is down $400 million when compared to the first quarter of the year. Over the years, the success of Druckenmiller has stood out in the hedge fund universe struggling from tech-led disruption.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context in mind, here is our list of the 10 best tech stocks to buy according to Stanley Druckenmiller. Although these stocks were listed according to the investment portfolio of Duquesne Capital at the end of the second quarter of 2021, the basic business fundamentals and analyst ratings for each are discussed alongside other details about the companies to provide potential investors with deeper insight so they can make more informed investment decisions. Data from the 873 hedge funds tracked by Insider Monkey was also used to gauge hedge fund sentiment around each stock.
Best Tech Stocks to Buy According to Stanley Druckenmiller
10. Sea Limited (NYSE: SE)
Number of Hedge Fund Holders: 104
Sea Limited (NYSE: SE) is placed tenth on our list of 10 best tech stocks to buy according to Stanley Druckenmiller. The firm is based in Singapore and owns and runs an ecommerce platform. Latest filings by Duquesne Capital reveal that the hedge fund owned 143,418 shares in the firm at the end of June 2021 that are worth $39 million, representing 1.13% of the portfolio. Druckenmiller has trimmed stake in the ecommerce giant by 76% compared to the first quarter of 2021.
On August 18, investment advisory Citi reiterated a Buy rating on Sea Limited (NYSE: SE) stock and raised the price target to $335 from $320, noting the strong momentum generated by the second quarter results would be maintained by the growing paying ratio.
At the end of the second quarter of 2021, 104 hedge funds in the database of Insider Monkey held stakes worth $12.2 billion in Sea Limited (NYSE: SE), up from 98 the preceding quarter worth $10.4 billion.
Just like Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), and Alphabet Inc. (NASDAQ: GOOG), Sea Limited (NYSE: SE) is one of the best tech stocks to buy according to Stanley Druckenmiller.
“Sea Ltd (SE): When I wrote our Q4 2019 letter about Shopee launching a Brazilian business, it seemed very few investors or competitors knew or cared.
A year ago, I wrote: “This is the first test for the ecommerce marketplace outside of its Southeast Asia home base. Will the platform’s fun and addicting features overcome a lack of local knowledge and presence? It’s hard to predict consumer behavior and how accepting users will be to a platform – especially one that’s a foreign culture and 10,000 miles away. The only way to know is to experiment and watch the results closely.
Empirically though, it seems that what consumers find entertaining in Asia, generally translates well to Brazil (and Shopee really is as much an entertainment platform, as an ecommerce one).
For example, just look at the top 10 free apps in Brazil. Two are utility messaging apps, so we’ll ignore those (WhatsApp and
Facebook Messenger). But among the remaining eight apps, they’re all entertainment based and overwhelmingly Asian. Four are from China (Kwai, TikTok, VStatus, TikTok Lite), two from Singapore (Free Fire and Shopee, both Sea Ltd apps), and one from the US (Instagram). The commonality is that all these apps are experts at creating addictive habits, as evidenced by their personalized recommendations, avg usage time, number of logins per day per user, etc.” (LINK)
I distinctly remember having conversations with several Brazilian hedge funds as recently as last summer who were investors in Sea Ltd. When the topic of Brazil came up, many of them didn’t even know Shopee was operating in their own backyard!
Part of this stems from the fact that Shopee tends to enter markets with a bottoms-up approach. Instead of going after urban, high disposable income users first (of which these hedge fund professionals were certainly part of), they tend to initially go after those with only a few hundred or thousand USD of annual disposable income. These users tend to reside outside of major cities, have fewer choices for recreational pastime (thus turning to gaming, short-form videos, or online shopping for entertainment), can’t afford “branded” items and thus are willing to take a chance on cheaper (but still good quality) un-branded goods, and are willing to wait several weeks for it to be shipped from Asian factories.
Anyone who has studied Pinduoduo (Nasdaq: PDD) in China, will recognize this strategy and just how large of a market these consumers can be. As Shopee gains popularity in a market, they will then start to slowly move “up-market”, and cater to more urban and higher-income consumers. They’ve already followed this exact strategy in Southeast Asia, and this is the point they’ve reached in Brazil over the past year.
Shopee made its first big social push last fall, hiring over a dozen influencers with 1M+ followers to promote Shopee’s Black Friday sale (LINK). In addition, they also released their first Brazilian TV commercial last year.
It seems these initiatives are working. Shopee now consistently ranks in Brazil’s top 5 apps (while sister app Free Fire, is also the #1 grossing app). In addition, Shopee also moved Pine Kyaw (LINK), one of their key lieutenants in Vietnam who successfully helped Shopee fight off competitors (Tiki, Lazada, Sendo), to Brazil last May.
For the past year, the company has insisted publicly that the Brazil initiative is still a “test” initiated by the cross-border team. While this may have been true at first, it’s clear this is no longer a “test”, but rather a strategic focus for Shopee and posed to be the next battleground. It’s likely the company has chosen to remain tight-lipped so as to not tip off competitors, while they quietly “position the troops” to prepare for a larger assault.
For example, Shopee is also starting to allow local sellers to join the platform and list their local inventory (LINK). By definition, this is no longer a cross-border initiative (i.e. allowing their Southeast Asian sellers to sell to Brazilian consumers, and then shipping the goods directly from Asia. This is the model Aliexpress follows.).
This is the start of a localized marketplace. And similar to their early days in Southeast Asia, the goal is to reach the “tipping point” at which the marketplace becomes self-sustainable (this concept is discussed in our Q1 2019 letter; LINK). The weapons of choice in reaching critical mass: social media influencers to drive rust & awareness, free shipping & discounts to acquire / convert these new customers, and gamification of shopping to drive continued engagement, habit building, and repeat purchases.
Given all of this, and the strong (but early) traction in the local Shopee Brazil marketplace, investors need to keep an eye on this development. It is the smallest GMV contribution among Shopee’s countries currently, but a large inherent call option in the valuation. Something that so far, seems greatly underappreciated. I suspect at some point in the near future, Shopee’s management team will disclose more on the initiative, and at which point investors will be surprised by how Shopee managed to quietly build one of the largest marketplaces in Brazil.”
9. Intuit Inc. (NASDAQ: INTU)
Number of Hedge Fund Holders: 66
Intuit Inc. (NASDAQ: INTU) is ranked ninth on our list of 10 best tech stocks to buy according to Stanley Druckenmiller. The firm is headquartered in California and operates as a software and financial technology company. According to regulatory filings, Duquesne Capital owned 175,515 shares of the firm at the end of the second quarter of 2021. These represent 2.46% of the portfolio and have a value of over $86 million.
On August 16, investment advisory Mizuho maintained a Buy rating on Intuit Inc. (NASDAQ: INTU) stock and raised the price target to $550 from $500, noting that the upcoming investor day and earnings for the fourth fiscal quarter would be growth catalysts for the firm in the near term.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm Fundsmith LLP is a leading shareholder in Intuit Inc. (NASDAQ: INTU) with 4.5 million shares worth more than $2.2 billion.
In addition to Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), and Alphabet Inc. (NASDAQ: GOOG), Intuit Inc. (NASDAQ: INTU) is one of the best tech stocks to buy according to Stanley Druckenmiller.
8. Airbnb, Inc. (NASDAQ: ABNB)
Number of Hedge Fund Holders: 58
Airbnb, Inc. (NASDAQ: ABNB) is a California-based company that owns and runs an online platform for travelers. It is placed eighth on our list of 10 best tech stocks to buy according to Stanley Druckenmiller. Latest data shows that Druckenmiller, through Duquesne Capital, owned 561,831 shares in the company at the end of June 2021, representing 2.47% of the portfolio. The shares are worth more than $86 million. The stake is a new addition to the portfolio compared to the first three months of 2021.
On August 13, investment advisory Needham reiterated a Buy rating on Airbnb, Inc. (NASDAQ: ABNB) stock and raised the price target to $200 from $194, appreciating the better-than-expected metrics for the firm in the second quarter earnings report.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Airbnb, Inc. (NASDAQ: ABNB) with 3.4 million shares worth more than $526 million.
Along with Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), and Alphabet Inc. (NASDAQ: GOOG), Airbnb, Inc. (NASDAQ: ABNB) is one of the best tech stocks to buy according to Stanley Druckenmiller.
“Throughout the quarter, you may have noticed that we averaged into a significant position in Airbnb (ABNB). Though the stock has been a relative underperformer since its February highs, we are highly confident about the company’s prospects and its ability to generate meaningful compounded returns over time.
Some history: We have been following Airbnb’s journey for several years, long before the company went public earlier this year. (In fact, nine years ago, in November 2012, Eric profiled the company for Inc.: “Airbnb Is Changing Travel.”)
Whenever we underwrite a new investment, we look for a few key attributes that help us determine the potential long-term value of a business, as well as its risks. In particular, we focus on management (Are they founders? Do they have skin the game? Are they playing the long game?), addressable market size (How big is the opportunity?), its relative growth and creativity to expand (Are they constantly innovating to make the product better for their customers?), margin expansion (Where can we find operating leverage in the model?), its status in the industry (Are they the dominant player? Can they
take market share from incumbents?), business risks (What are we missing? Are customers dissatisfied? What do employees say?) and probably a dozen more elements that are critical to our process. It’s only then do we take out the pencils do the valuation work.
In short, ABNB fulfills pretty much every element of a business model we’re attracted to: First, it’s highly scalable marketplace-based business model that unites buyer and seller with observable flywheel effects. (This is an important observation, in that the platform creates significant economic value for millions of hosts who rely on Airbnb, which in turn attracts new hosts who identify the opportunity, which creates more inventory, which turn attracts more travelers, which attracts more hosts, and soon.) Second, it has a global focus with significant opportunities to expand its operating leverage; Third,
its management—which is still founder-led—stands out to us as long-term thinkers capable of handling crisis, which the team demonstrated throughout the pandemic by dropping operating costs and turning the business into a more efficient, lean organization. (Like Churchill said: “Never let a good crisis go to waste.”)..”
7. Netflix, Inc. (NASDAQ: NFLX)
Number of Hedge Fund Holders: 113
Netflix, Inc. (NASDAQ: NFLX) is a California-based company that provides entertainment services through digital platforms. It is ranked seventh on our list of 10 best tech stocks to buy according to Stanley Druckenmiller. Duquesne Capital owned 172,215 shares in the firm at the end of the second quarter of 2021. These are worth close to $91 million and represent 2.61% of the portfolio. The stake is another new addition to the portfolio when compared to the first quarter of the year.
On July 21, investment advisory UBS kept a Buy rating on Netflix, Inc. (NASDAQ: NFLX) stock with a price target of $620, underlining in a research note that the inflecting trends should drive improved investor sentiment for the company in the coming months.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based firm Citadel Investment Group is a leading shareholder in Netflix, Inc. (NASDAQ: NFLX) with 4.6 million shares worth more than $2.4 billion.
Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), and Alphabet Inc. (NASDAQ: GOOG) are some of the best tech stocks to buy according to Stanley Druckenmiller, just like Netflix, Inc. (NASDAQ: NFLX).
“We purchased Netflix in March, initiating a 3% position in the Portfolio. We believe Netflix is a highly competitively advantaged company. It has recently met all our investment guardrails, and we anticipate it will remain sustainably above our guardrails over the next five years and beyond. We know Netflix for its ubiquitous streaming service and deep library of owned content. The company has made investments in this content (currently running at nearly $20 billion/year), generally keeping subscribers highly engaged and loyal to their service. The company has number one market share in 99% of markets globally, but it is our view that video streaming on-demand is still an underpenetrated space with many years of attractive growth likely ahead. The service is also relatively affordable at roughly $11/month on average globally.
We believe Netflix’s growth in content spend is beginning to moderate, which could allow margin expansion to continue for many years when paired with ongoing subscriber growth and price increases. While there is competition from the likes of Apple (Apple TV+), Amazon (Prime Video), Disney (Disney+ and Hulu), and others, we believe there can be a handful of winners in this industry. Already, we see many people subscribe to multiple streaming video services, with Netflix being their “anchor” service. That said, the barriers to entry are high, and we believe they are getting higher given the substantial amount of capital and size of the subscriber base required to maintain a competitive service for both viewers and content producers. Over the next five years, we expect Netflix’s earnings growth to be approximately 30% annualized and free cash flow to grow at an even higher rate.”
6. Facebook, Inc. (NASDAQ: FB)
Number of Hedge Fund Holders: 266
Facebook, Inc. (NASDAQ: FB) is placed sixth on our list of 10 best tech stocks to buy according to Stanley Druckenmiller. The company operates from California. It owns and runs several social media platforms. Latest filings reveal that Duquesne Capital owned 272,488 shares in the company at the end of June 2021, representing 2.72% of the portfolio. The shares are valued at close to $95 million. Druckenmiller has increased Duquesne’s stake in the firm by 47% in the second quarter compared to the first three months of 2021.
On July 29, investment advisory Evercore reiterated an Outperform rating on Facebook, Inc. (NASDAQ: FB) stock and raised the price target to $450 from $400, highlighting that the advisory remained bullish on the long-term future for the company.
At the end of the second quarter of 2021, 266 hedge funds in the database of Insider Monkey held stakes worth $42 billion in Facebook, Inc. (NASDAQ: FB), up from 257 in the preceding quarter worth $40 billion.
Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), and Alphabet Inc. (NASDAQ: GOOG) are some of the best tech stocks to buy according to Stanley Druckenmiller, along with Facebook, Inc. (NASDAQ: FB).
“We continued to keep our learnings from 2020 in mind during the quarter as we sought to increase the up capture of the portfolio. We also made adjustments to the portfolio’s top 10 holdings to increase the participation of select stocks, including Facebook, while trimming our weighting to stable names, which now represent 47% of the portfolio. Our repositioning has been encouraging so far with the portfolio performing better on up days in the market while maintaining good down capture during more turbulent sessions.”
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Disclosure. None. 10 Best Tech Stocks to Buy According to Stanley Druckenmiller is originally published on Insider Monkey.