Billionaire Stanley Druckenmiller Dumped Sandisk and Nearly Quadrupled His Position in a Virtual Monopoly That's Up Over 12,000% Since Its IPO

Although earnings season tends to garner most of the glory each quarter, few data releases are more important than quarterly filed Form 13Fs. A 13F provides investors with a way to track which stocks Wall Street's brightest money managers bought and sold in the latest quarter.

Billionaire Stanley Druckenmiller of Duquesne Family Office is among the most-followed (and active) money managers. During the fourth quarter, Duquesne's billionaire boss sold out of 31 stocks, reduced 16 holdings, added to 13 existing stakes, and opened 28 new positions. Perhaps most eyebrow-raising, Druckenmiller dumped his fund's entire position in storage solutions titan Sandisk (NASDAQ: SNDK) and nearly quadrupled his stake in a virtual monopoly that's skyrocketed 12,100% since its initial public offering (IPO) in 2004.

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Billionaire Stanley Druckenmiller sent Sandisk to the chopping block

On average, Druckenmiller has held the 62 securities in his fund's portfolio for 7.5 months. In the case of Sandisk, Druckenmiller's hold time was even shorter. After purchasing 166,235 shares in the third quarter, he sent every share to the chopping block during the fourth quarter.

The most logical reason for this selling is simple profit-taking. Though we don't know precisely when Duquesne's chief investor purchased or sold Sandisk stock, we do know that it spent much of its time between $40 and $100 per share during the third quarter, and $110 to $240 per share in the fourth quarter. It's quite possible that Druckenmiller generated triple-digit returns in mere months from this stake.

Sandisk's outperformance reflects the insatiable demand for NAND flash memory and solid-state drives in artificial intelligence (AI)-accelerated data centers. With memory in short supply, Sandisk has been enjoying premium pricing power.

However, Druckenmiller dumping Sandisk may also signal skepticism toward the AI revolution. In a May 2024 interview with CNBC, he noted that "AI might be a little overhyped now, but underhyped long term."

Every game-changing technology since the advent of the internet three decades ago has navigated an early stage bubble-bursting event. These bubbles are caused by investors overestimating the adoption or optimization of a new technology. We're likely still years away from businesses optimizing AI, suggesting Sandisk's parabolic rally may not be sustainable.

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Duquesne's billionaire boss is piling into this virtual monopoly

On the other end of the spectrum, billionaire Stanley Druckenmiller added 282,800 shares of Google parent Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG). This purchase increased Duquesne's stake in the Class A shares (GOOGL) by 277% from Sept. 30.

Alphabet's shares haven't rallied over 12,000% since its IPO by accident. These gains reflect its virtual monopoly in internet search and the growing importance of its cloud infrastructure services platform, Google Cloud.

According to GlobalStats, Google has accounted for an 89% to 93% share of global internet search traffic over the trailing decade. This sustainable moat ensures exceptional ad-pricing power and makes Google the go-to for businesses wanting to target large audiences with their message(s). Advertising is the foundational cash cow of Alphabet's business.

However, Google Cloud is no slouch, either. The incorporation of generative AI and large language model solutions into the world's No. 3 cloud infrastructure services platform is reaccelerating its growth. Google Cloud's sales vaulted 48% in the fourth quarter from the prior-year period. With cloud margins handily outpacing advertising margins, Google Cloud is on pace to eventually become Alphabet's premier source of cash flow.

Sean Williams has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.