George Soros (Trades, Portfolio) and Stanley Druckenmiller (Trades, Portfolio) famously worked together on a trade to short the British pound in the 1990s, reaping a $1 billion. At the time, Druckenmiller ran Soros Quantum Fund and leveraged it by one and a half times to make the bet. Still, Soros called it a “safe bet” in a 1994 interview.
“Actually in terms of the risk we take, it wasn’t [risky], it wasn’t even a full exposure, because the risk of loss was maybe, 2-2.5%, so it was 1.5 times 2.5%. Let’s say a 4% loss. It wouldn’t have killed us,” Soros said.
In the same interview, a young Druckenmiller described Soros’ thinking when he made the enormous trade.
“If there’s one thing I’ve learned from him, it’s when you’re right and you know something, you really feel it, you can’t have enough,” Druckenmiller said. “And if I had to sum up his investing philosophy in one sentence, it’s that it’s not whether you’re right or wrong, you just have to have the maximum when you’re right, and that’s his unique and innate ability.”
Druckenmiller now runs the New York-based Duquesne Family Office after closing his Duquesne Capital, which reportedly accumulated annual returns of 30%. Soros operates Soros Fund Management, with roughly $30 billion in family assets under management.
Both Druckenmiller and Soros take a macroeconomic investing approach. Soros calls his philosophy “reflexivity” and described it in his book, “The Alchemy of Finance,” in 1987. It is based on the ideas that market participants will always have a “partial and distorted” view of the world, and they will therefore make “inappropriate actions,” he wrote in the Financial Times.
The two investors have five stocks in common in their portfolios as of first quarter-end, some of which are among their top holdings. Soros and Druckenmiller both own: Netflix (NFLX, Financial), Amazon (AMZN, Financial), Alphabet (GOOGL, Financial), Micron Technologies (MU, Financial) and Microsoft (MSFT, Financial).
Soros owns 220,000 shares of Netflix, valued at $64.98 million and worth 1.2% of his equity portfolio. The position is his 14th largest out of 103 total stocks in his portfolio. Druckenmiller owns 189,700 shares of the company, valued at $56.03 billion and worth 3.1% of his equity portfolio. It is his 11th out of 22 total portfolio positions.
Netflix Inc. has a market cap of $158.33 billion; its shares were traded around $364.23 Thursday with a P/E ratio of 166.31 and P/S ratio of 11.79. Netflix Inc. had an annual average earnings growth of 6.10% over the past 10 years.
Soros owns 44,200 shares of Amazon, valued at $63.97 million and worth 1.18% of his equity portfolio. It is his 15th largest position. Druckenmiller owns 170,853 shares of the company, valued at $247.28 million and worth 13.66% of the equity portfolio. It is his second largest position.
Amazon.com Inc. has a market cap of $879.7 billion; its shares were traded around $1,812.97 Thursday with a P/E ratio of 228.04 and P/S ratio of 4.64. Amazon.com Inc. had an annual average earnings growth of 30.20% over the past 10 years. GuruFocus rated Amazon.com Inc. the business predictability rank of 4-star.
Soros owns 25,400 shares of Alphabet, valued at $26 million, which accounts for 0.49% of his equity portfolio. It is not a top position. Druckenmiller holds 259,150 shares, valued at $268.76 million, which accounts for 14.85% of his equity portfolio. Alphabet is Druckenmiller’s largest position.
Alphabet Inc. has a market cap of $826.96 billion; its shares were traded around $1,199.10 Thursday with a P/E ratio of 50.97 and P/S ratio of 7.19. Alphabet Inc had an annual average earnings growth of 16.60% over the past 10 years. GuruFocus rated Alphabet Inc. the business predictability rank of 3-star.
Micron Technologies (MU, Financial)
Soros owns 395,912 shares of Micron Technologies, valued at $20.64 million, which accounts for 0.38% of his equity portfolio. It is not a top position for Soros. Druckenmiller holds 2,187,500 shares of the company, valued at $114.06 million, which accounts for 6.3% of his equity portfolio. It is his eighth largest position.
Micron Technology Inc. has a market cap of $65.2 billion; its shares were traded around $56.22 Thursday with a P/E ratio of 5.63 and P/S ratio of 2.45. Micron Technology Inc. had an annual average earnings growth of 19.70% over the past 10 years. GuruFocus rated Micron Technology Inc. the business predictability rank of 2.5-star.
Soros owns 112,500 shares of Microsoft, valued at $15.53 million, which accounts of 0.29% of his equity portfolio. The stock is not one of his largest holdings. Druckenmiller owns 2,430,200 shares of Microsoft, valued at $221.8 million, which accounts for 12.26% of his equity portfolio. It is his third largest position.
Microsoft Corp. has a market cap of $802.13 billion; its shares were traded around $104.40 Thursday with a P/E ratio of 71.51 and P/S ratio of 8.16. The trailing 12-month dividend yield of Microsoft Corp. stocks is 1.59%. The forward dividend yield of Microsoft Corp stocks is 1.60%. Microsoft Corp. had an annual average earnings growth of 5.50% over the past 10 years. GuruFocus rated Microsoft Corp the business predictability rank of 3.5-star.
