For a lot of investors, earnings season is the pinnacle of each quarter. The six-week period where a majority of S&P 500 businesses report their operating results gives investors invaluable information on the health of the U.S. economy.
But earnings season isn’t the only important data dump of the quarter. Aug. 14 marked the deadline for institutional investors with at least $100 million in assets under management to file Form 13F with the Securities and Exchange Commission. A 13F provides a concise snapshot for investors of which stocks the smartest investors on Wall Street bought and sold in the latest quarter.
Though Warren Buffett is the most closely monitored of all money managers, he’s not the only billionaire with a penchant for outsized returns. Duquesne Family Office’s billionaire boss Stanley Druckenmiller is known to deliver supercharged returns and spot amazing deals hiding in plain sight.
Druckenmiller was nothing short of a busy bee amid tariff-related volatility during the second quarter. He purchased 35 new securities, added to 13 existing positions, reduced Duquesne’s stake in 18 stocks, and sent another 18 holdings packing.
Perhaps the most surprising of these moves was jettisoning his fund’s position in electric-vehicle (EV) manufacturer Tesla (TSLA), and subsequently piling into what can be described as Wall Street’s hottest stock over the last week.
Is Tesla headed for a breakdown?
Among the 18 stocks given the heave-ho by billionaire Stanley Druckenmiller during the June-ended quarter, perhaps none is more an eyebrow-raiser than Tesla. Duquesne’s investment chief slashed his fund’s stake in Tesla by 50% during the first quarter and dumped the remaining 18,838 shares in the latest quarter.
Druckenmiller is no stranger to investing in market-leading businesses, of which Tesla has certainly met the definition. It’s the first automaker in more than a half-century to have built itself from the ground up to mass production. Further, it’s the only pure-play EV maker that’s demonstrated it can be profitable on a recurring basis. Tesla is working on what could be its sixth consecutive year of profit.
The timing of Druckenmiller’s purchase of Tesla stock (the fourth quarter of 2024) also suggests he may have been riding a wave of sentiment. Tesla CEO Elon Musk was an outspoken supporter of Donald Trump’s presidential campaign and ultimately earned a special role helping out the Department of Government Efficiency (DOGE). Trump and Musk remaining close was believed to be a positive for Tesla.
But this member of the “Magnificent Seven” is anything but perfect and Druckenmiller likely knows it.
The first issue for Tesla is that demand for its EVs has waned. In spite of more than a half-dozen sweeping price cuts, automotive revenue plunged by 16% in the second quarter from the prior-year period, with global vehicle inventory rising by 33% to 24 days. Increasing competition is doing a number on Tesla, and its automotive margin is paying the price.
To add fuel to the fire, the U.S. automotive regulatory tax credit for EVs is going away following Trump’s flagship “Big, Beautiful Bill” becoming law. Tesla has relied on automotive regulatory credits and net interest income on its cash to drive more than half of its pre-tax income. It demonstrates just how perilous things have become for this once-magnificent company.
Druckenmiller’s exit may have also been spurred by the company’s failed innovations. For all intents and purposes, Cybertruck sales have been a disappointment, and Tesla’s robotaxi launch in Austin, TX, was very limited and underwhelming.
This speaks to an unfortunate theme with Tesla’s CEO: overpromising and consistently underdelivering. Musk has a tendency to make claims that can’t be kept, such as promising Level 5 autonomy for 11 consecutive years when his company has been stuck at Level 2 autonomy the entire time.
Lastly, Duquesne’s billionaire investor might have been scared off by Tesla’s valuation. Shares are valued at 234 times forecast earnings per share (EPS) in 2025 despite an expected 5% decline in net sales. Meanwhile, most auto stocks trade closer to 10 times forecast EPS.
Stanley Druckenmiller loaded up on shares of this skyrocketing media stock
On the other end of the spectrum, Duquesne Family Office’s head investor purchased nearly three dozen new securities, including call options. Based on what transpired last week, the most intriguing of these buys looks to be legacy media company Warner Bros. Discovery (WBD).
Between April 1 and June 30, Druckenmiller oversaw the purchase of 6,537,160 shares of Warner Bros. Discovery stock. With its shares up 56% last week, the value of this position may have increased by more than $44 million (assuming no additional shares were purchased or sold in the current quarter).
The reason Warner Bros. is the buzz of Wall Street has to do with rumors that, as of this writing in the late afternoon on Sept. 12, Paramount Skydance (PSKY) is preparing a bid for the company, according to The Wall Street Journal. Though no bid has been officially presented, the expectation is that most of the offer will come in the form of cash, which could be especially tantalizing to Warner Bros. Discovery shareholders who’ve watched the bull market leave them in the dust.
What makes media merger speculation even more intriguing is that it follows Warner Bros. Discovery’s June announcement of a planned split into two separate media companies. On one end will be its Streaming & Studios (S&S) company that consists of Warner Bros. Television, its movie studios, HBO and HBO Max. On the other end is Global Networks, which features sports and news television brands, as well as the Discovery+ streaming service.
A potential merger/acquisition between Paramount Skydance and Warner Bros. may initiate a bidding war for Warner Bros. Discovery’s S&S segment, which some analysts on Wall Street have intimated may be sold to improve balance sheet flexibility.
But there were other signs prior to the Paramount Skydance bid rumor that Warner Bros. Discovery represented a screaming bargain. In particular, the company’s streaming segment has been delivering much-improved operating results. Selling, general & administrative costs are declining, while revenue roars higher amid a steady influx of global subscribers. Its international subscriber count jumped 34% from the prior-year period to 67.9 million, as of June 30.
Additionally, it’s only a matter of time before advertising revenue acts as a tailwind and not a headwind for Warner Bros. Discovery. Though uncertainties have coerced businesses to pare back their marketing budgets recently, long-winded periods of economic expansion favor ad-driven businesses like Warner Bros. Discovery.
Lastly, shares of the company had traded well below their book value for years until the final two trading days of last week. This gave opportunistic investors like billionaire Stanley Druckenmiller a window to pounce.
And so, the market, that fickle muse, dances to the tune of speculation-while the wise observe, and the foolish follow. 🎩
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2025-09-15 10:12