Stanley Druckenmiller knows what to look for when he's investing.
"What a company's been earning doesn't mean anything," the billionaire investor once said. "What you have to look at is what people think it's going to earn.
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"If you can see something in two years is going to be entirely different than the conventional wisdom, that's how you make money," he added.
Going against the conventional wisdom has worked well for Druckenmiller, who ranked No. 277 on Bloomberg's Billionaire Index, weighing in with a net worth of $9.98 billion.
He began his financial career in 1977 as a management trainee at Pittsburgh National Bank and became head of the bank's equity research group after one year.
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Druckenmiller managed money for the investor and philanthropist George Soros from 1988 to 2000 as the lead portfolio manager for Quantum Fund.
He credited Soros with teaching him that "when you have tremendous conviction on a trade, you have to go for the jugular."
Druckenmiller takes interest in biotech
"If you're early on in your career and they give you a choice between a great mentor or higher pay, take the mentor every time," he said. "It's not even close. And don't even think about leaving that mentor until your learning curve peaks."
Druckenmiller is also former chairman and president of Duquesne Capital Management, which he founded in 1981 and closed in 2010 when it had more than $12 billion in assets.
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The company generated an average annual return of 30%.
In 2011, he established the wealth-management firm Duquesne Family Office.
Yes, there was that whole Nvidia (NVDA) thing, where Druckenmiller sold off his shares of the AI-chip behemoth, which posted quarterly results on Nov. 20, but he has acknowledged his misstep on that one.
Lately, the legendary investor has shown an interest in biotech, according to Duquesne Family Office's third-quarter Securities and Exchange Commission 13F filing.
The firm increased its position in Natera (NTRA) , a clinical genetic testing company, by 80%, making it the family office’s largest U.S. common stock long holding at the end of the quarter.
Founded in 2004, the Austin company launched its first product, the Spectrum preimplantation genetic test, in 2009. Natera went public in 2015.
The company specializes in what's called noninvasive cell-free DNA (cfDNA) testing technology.
The test analyzes small fragments of DNA found freely circulating in a bodily fluid, like blood, to detect genetic abnormalities or conditions by examining the sequence and quantity of those DNA fragments.
Cell-free DNA testing is often used in prenatal testing to screen for chromosomal disorders in a fetus during pregnancy.
Natera's Signatera clinical units are used to perform personalized blood tests that help detect and quantify cancer in patients who have been previously diagnosed with cancer.
The company's stock has more than doubled (up 168%) year to date and tripled (up 206%) from a year ago. On Nov. 20 Natera shares touched a record just under $172.
Natera recently posted better-than-expected third-quarter results, and Chief Executive Steve Chapman told analysts that "2024 has already been a transformational year for Natera and I think Q3 represents our best quarter yet."
Analyst highly bullish on Natera
"We generated $439.8 million in revenue, up 64% from the third quarter of last year, which represents a record quarter for revenue growth," he said. "Volumes continue to grow rapidly, up 24% year-over-year."
Investment firms adjusted their price targets for Natera following the earnings release.
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Analysts at JP Morgan raised their price target for Natera to $160 from $135 while maintaining an overweight rating on the shares.
The firm said that the company reported another very strong quarter.
Natera "continues to fire on all cylinders" from a volume, selling price, margin and cash-burn perspective with room for further improvement heading into 2025, JP Morgan said.
Following the quarter, the investment firm continues to believe Natera is among the highest quality companies in the diagnostics space.
Canaccord raised its price target on Natera to $165 from $150 and affirmed a buy rating on the shares.
The firm said it remained "highly bullish" on Natera after "another standout quarter" and guidance raise.
The company's performance was driven primarily by solid increases in test volume and average selling price in women's health and oncology, Canaccord said.
The investment firm said Natera remains undervalued.
And Baird raised its price target on Natera to $160 from $120 while reiterating an outperform rating on the shares.
Baird said the company's 3Q revenue/gross margins were well ahead of estimates.
Business momentum continued to be framed as broad-based, including 60% year-over-year Signatera clinical volume growth and positive women's health account wins.
Duquesne’s second-largest new position in the third quarter was semiconductor producer Broadcom (AVGO) . He also continued to sell off his shares in Microsoft (MSFT) .
So, when to comes investing, Druckenmiller says you should look beyond the conventional wisdom, find a great mentor early in your career, and have some fun while you're at it.
"I've always loved to play games, and face it: Investing is one big game," he said. "You need to be decisive, open-minded, flexible and competitive."
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