Macro

Druckenmiller's $664M Bet on Small-Caps, Cuts Nvidia Stake

Druckenmiller invests $664 million in small-caps, signaling a bullish shift, while reshuffling tech portfolio amidst a tech-led market rally.

By Alex P. Chase

5/16, 13:58 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
iShares Russell 2000 ETF
NVIDIA Corporation
article-main-img

Key Takeaway

  • Stanley Druckenmiller invested in small-cap stocks, buying call options on 3,157,900 shares of the iShares Russell 2000 ETF worth $664 million.
  • Druckenmiller reduced his Nvidia stake by over 70% after the stock's dramatic rally to $900, citing a need for a break from its rapid ascent.
  • Added a significant position in Coherent as his eighth-biggest holding, showcasing strategic shifts in his investment portfolio.

Druckenmiller's Bold Small-Cap Bet

Billionaire investor Stanley Druckenmiller, through his Duquesne Family Office, has taken a significant position in small-cap stocks, purchasing call options against 3,157,900 shares of the iShares Russell 2000 ETF (IWM) valued at $664 million. This move marks Druckenmiller's largest bet as of the end of March, signaling a potential shift in market leadership towards smaller companies. Despite the Russell 2000's underperformance relative to the S&P 500 this year, Druckenmiller's strategy suggests a bullish outlook on small caps, which have lagged behind their larger counterparts.

Tech Portfolio Reshuffle

In addition to his small-cap wager, Druckenmiller has made notable adjustments to his tech holdings. The investor reduced his stake in Nvidia by more than 70%, despite maintaining a bullish stance on the artificial intelligence boom. This decision came after Nvidia's stock surged 90% in 2024, prompting Druckenmiller to take profits. Furthermore, his firm added a significant stake in semiconductor company Coherent, now his eighth-largest holding, indicating a strategic diversification within the tech sector.

Market Movements and Strategic Bets

The broader market context for Druckenmiller's moves includes a tech-led rally that has added $11 trillion in value to US stocks since October. Other prominent investors, such as David Tepper, have also adjusted their tech holdings, reducing stakes in major companies like Amazon, Microsoft, and Meta Platforms. These adjustments reflect a cautious approach to the sector's rapid growth and high valuations. Meanwhile, Druckenmiller's bet on the Russell 2000 suggests an anticipation of a market rotation towards small-cap stocks, which could benefit from a more favorable economic environment and potential interest rate cuts.

Street Views

  • Stanley Druckenmiller, Duquesne Family Office (Bullish on small-cap stocks):

    "Druckenmiller could be betting that the market leadership could rotate to smaller stocks as the rally broadens out."

  • Stanley Druckenmiller, Duquesne Family Office (Cautiously Optimistic on Nvidia and AI sector):

    "We did cut that and a lot of other positions in late March. I just need a break. We’ve had a hell of a run. A lot of what we recognized has become recognized by the marketplace now... I’m not Warren Buffett — I don’t own things for 10 or 20 years. I wish I was Warren Buffett."