Facebook and Micron stock
According to the filing, the fund also increased its Facebook stake by nearly 20%. Both tech stocks are now among the top ten holdings of the hedge fund.
Seven of Klarman’s top holdings as of the end of June were tech companies, including Intel, Alphabet, Quovo, and ViaSat.
The style appears to deviate from value investing, a strategy that Klarman has promoted for decades and about which he wrote a best-selling book. He was even dubbed “the next Warren Buffett” and “the Oracle of Boston.” But, like Buffett, who was forced to buy into Apple in a high-flying market, Klarman began to embrace growth stocks when his market-beating record was threatened.
As of 2019, his hedge fund managed about $30 billion, and he underperformed the market that year. He claimed to have been a “significant” seller. Klarman earned annual returns of more than 16 percent for nearly three decades, from 1985 to 2015.
Klarman’s shift in investing style is perhaps best exemplified by his increased interest in SPACs. Special purpose acquisition companies are formed to raise capital for the public offering of an unidentified company within two years.
According to an analysis of the SEC filing, as of the end of the second quarter, Baupost had $891 million invested in a total of 18 SPACs or companies that went public via blank-check deals.
The investor purchased shares of ironSource, an Israeli mobile adtech firm that went public in June after completing a merger with a SPAC backed by U.S. private equity firm Thoma Bravo.
Klarman is also involved in two aerospace SPACs, Vertical Aerospace and Joby Aviation, which are both electric vertical takeoff and landing aircraft manufacturers that have recently gone public.
Baupost also has stakes in Redball Acquisition, Altimeter Growth 2 Corp, and Bill Ackman’s Pershing Square Tontine Holdings. The fund reduced its stake in Ackman’s SPAC by 20% in the second quarter, to $230 million, after Ackman dropped his deal to buy 10% of Universal Music, citing regulatory concerns.
Following a record first quarter, the SPAC market has recently experienced a significant slowdown due to increased regulatory scrutiny. In the second quarter, issuance fell nearly 90% as the SEC issued a slew of warnings and guidance on this risky asset.
In addition, during the last quarter, the manager purchased a number of event-driven stocks. He purchased Translate Bio, a biotech firm that specializes in messenger RNA technology, which is used in some Covid-19 vaccines. Sanofi agreed to buy Translate for $3.2 billion in cash earlier this month.
Klarman also purchased Shaw Communications, which had just been acquired by Rogers Communications in a $26 billion deal, as well as Garrett Motion, a recent Honeywell spin-off. Outbrain, a content recommendation company that went public in July, was also purchased by the manager.
Several pharmaceutical and health-care stocks have risen in value as a result of new products used to prevent or treat the coronavirus pandemic. Cramer, however, stated on “Squawk Box” that Regeneron’s stock deserved a bigger boost because of the company’s monoclonal antibody cocktail.
“If you think this thing is going to continue,” Cramer said, “this is the stock to own.”
On the other hand, he said vaccine-maker shares, such as Moderna, were “OK” but “inflated.”
Some studies have found that Regeneron’s treatment reduces the severity of symptoms and the risk of death in Covid-19 patients. The Food and Drug Administration expanded Regeneron’s emergency use authorization in July, allowing the treatment to be used preventively before patients developed symptoms.
The treatment has become a critical component of response efforts in some of the states hardest hit by the delta variant of the virus, such as Mississippi and Florida.
Regeneron shares have gained traction in recent months, but the stock is up less than 2% year to date.
During that time period, Moderna, BioNTech, Pfizer, and Johnson & Johnson all outperformed Regeneron. Moderna, in particular, has seen a massive increase, rising by more than 400%.
The Duquesne Family Office’s stake in vaccine maker Moderna is worth approximately $52.3 million. Moderna’s stock rose more than 79 percent in the second quarter, owing to the nationwide rollout of one of three Covid-19 vaccines.
Druckenmiller also made new bets on Netflix and Airbnb, worth approximately $91 million and $86 million, respectively. During the peak of the pandemic in the first quarter of 2020, Druckenmiller owned Netflix but sold out, most likely to profit as the pandemic stock skyrocketed. However, the hedge fund pioneer has returned to the streaming behemoth.
The firm owns a $34 million position in General Motors and a $356 million position in Smartsheet.com. The billionaire investor has also taken on new roles at Farfetch, CF Industries, Mosaic Company, and Marriott International.
During the second quarter, Druckenmiller said that the Federal Reserve’s easy policies are lulling investors into a false sense of security. Risks will continue to be ignored by market participants “until the Fed stops canceling market signals,” Druckenmiller predicted in June.
Druckenmiller was known for his quick trading at the helm of the now-defunct Duquesne Capital and, before that, Soros Fund Management. Duquesne’s average annual return to investors was 30 percent.
Here are the top ten holdings of Duquesne Family Office as of June 30.
Druckenmiller increased his stake in some of the hedge fund’s top holdings, including Amazon, Alphabet, Carvana, and Facebook. The Duquesne Family Office owns approximately $325 million in Amazon stock and $222 million in Alphabet stock. Carvana is worth $109 million to the firm, and Facebook is worth nearly $95 million.
Duquesne Family Office also expanded its presence in KBR, Option Care Health, Expedia, Mastercard, and Visa.
Druckenmiller sold Palantir Technologies, ON Semiconductor, Flex, Builders FirstSource, and Freeport-McMoRan shares. In addition, the hedge fund reduced its holdings in Microsoft, Sea, T-Mobile, Reata Pharmaceuticals, and Snowflake.
Duquesne Family Office has sold its holdings in Barrick Gold, Citigroup, First Horizon, Vale, Alcoa, Uber, Nuance Communications, Coupang, Fisker, and Sunrun.
Kroger and Aon stocks
According to a new 13F filing, the conglomerate increased its Kroger stake by 21% to 61,788 shares worth $2.37 billion at the end of the second quarter. Berkshire first invested in the company in the fourth quarter of 2019.
Meanwhile, Berkshire increased its relatively new bet on Aon by 7% to $1.05 billion at the end of the second quarter, according to the filing. Last month, Aon and Willis Towers Watson abandoned their merger to form a massive global insurance broker and consultancy after the Justice Department filed an antitrust lawsuit against the deal.
Berkshire reduced its stake in General Motors by 10% to 60 million shares in the most recent quarter.
In terms of equity portfolio adjustments, the conglomerate had a relatively quiet quarter. As of the end of June, the company had not added any new stakes.
Apple, Coca-Cola, American Express, and Bank of America accounted for roughly 70% of Berkshire’s equity portfolio.
With a stake worth more than $121 billion, Apple remained the single largest holding in Berkshire’s equity portfolio.
The conglomerate has had a strong quarter, with operating earnings recovering from pandemic damage. Last quarter, the company continued to aggressively buy back Berkshire shares rather than making large acquisitions, bringing the six-month total to $12.6 billion.