Here's Billionaire Stanley Druckenmiller's Top Holding (Hint: It's Not Alphabet or Nvidia)
Key Points
Most investors’ portfolios hold at least a couple of the market’s biggest companies, just because these names are best-known to most investors.
These crowded trades in already-massive companies, however, can mean their potential upside is limited.
Druckenmiller appears to remember that the market’s biggest winners are often the fast-growing up-and-comers before they become well-known names.
- 10 stocks we like better than Natera ›
Your personal portfolio doesn't necessarily need to mirror a billionaire investor's holdings. But let's face it -- they manage billion-dollar portfolios for a reason.
And that's what makes Stanley Druckenmiller's current positions so interesting to investors on the hunt for a new pick. The former hedge fund manager doesn't own the obvious and usual suspects, such as Nvidia or Alphabet, even though these names are currently the world's biggest and most ownable publicly traded companies. Rather, Druckenmiller's family's top holding right now is its $600 million position -- 18% of the portfolio -- in a healthcare company called Natera (NASDAQ: NTRA).
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Here's a closer look.
Image source: Getty Images.
What's Natera?
With a market cap of just over $30 billion, Natera is not exactly a household name. But Druckenmiller seems to think it could eventually become one. And for good reason.
Natera offers a wide range of genetic testing, including prenatal testing for potential birthing-related problems to determining how a tumor is likely to respond to a particular cancer treatment to figuring out the likelihood that a patient's body will reject a transplanted organ. This information would have been difficult, if not impossible, to know before medical science was able to study DNA in detail.
Natera has taken this young science and made great strides in putting it to marketable use. Last year's top line of $2.3 billion was up 35% year over year. Analysts are looking for revenue of $2.8 billion this year, en route to $3.3 billion next year.
This is still just the beginning, though. An outlook from industry research outfit Precedence Research suggests the worldwide genetic testing business is set to grow at an average annual pace of more than 11% through 2035, when it could be worth more than $70 billion per year. Natera is well-positioned to capture more than its fair share of this growth.
The kicker: While not yet profitable, the company's moving in this direction. The analyst community expects this year's per-share loss of $1.58 to shrink to $0.32 per share next year, before swinging to a profit of $1.43 per share in fiscal 2028.
Given all of this, it's not difficult to see why Druckenmiller is willing to take such a sizable swing on this stock.
Just understand the risk
Granted, Druckenmiller can afford to take such a risk, just as he can afford to be patient if the stock underperforms for a while -- a luxury that most ordinary investors simply don't have. That's why you might want to think carefully before following his lead into this name.
You should also know that analysts' earnings forecasts are all over the proverbial map. While the consensus calls for a swing to a per-share profit of $1.43 in 2028, the underlying numbers range from a loss of $1.32 to a profit of $5.03.(Read between the lines: Nobody really knows exactly how well this company is going to grow its top and bottom lines between now and then.)
Still, Druckenmiller has found a name that, at the very least, is worth considering for a small place in your portfolio.
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James Brumley has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Natera, and Nvidia. The Motley Fool has a disclosure policy.
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