Billionaire Investor’s Surprising Move: Dumping AI Stock for High-Yield Dividend
Investors recently got a glimpse into the investment strategies of top money managers, including billionaire Stanley Druckenmiller, who oversees nearly $3 billion in assets at Duquesne Family Office. Among the most notable moves made by Druckenmiller’s team was the sale of a significant stake in artificial intelligence (AI) stock Palantir Technologies (NASDAQ: PLTR) and a simultaneous increase in holdings of high-yield dividend stock Philip Morris International (NYSE: PM).
A Shift Away from AI
Duquesne Family Office held close to 770,000 shares of Palantir Technologies as of the midpoint of 2024. However, by the end of September, the fund had sold 728,255 shares, reducing its stake by 95%. This move may have been driven by profit-taking, as Palantir’s stock has surged 291% year-to-date. Additionally, the company’s valuation has become increasingly rich, with shares trading at over 43 times forecast sales for next year and 143 times estimated earnings per share (EPS) in 2025.
Embracing High-Yield Dividends
While many investors are focused on AI stocks and the latest trends, Druckenmiller has taken a contrarian approach by investing in a high-yield dividend stock. Since the end of March, Duquesne’s 13Fs show that Druckenmiller has overseen the purchase of 1,134,635 shares of Philip Morris International. This move may seem surprising, given the challenges faced by tobacco stocks, including regulatory pressures and declining smoking rates. However, Philip Morris has demonstrated exceptional pricing power, geographic revenue diversity, and a growing presence in smokeless tobacco products.
The Attraction of Philip Morris
Philip Morris International has outperformed expectations, reaching multiple all-time highs this year. The company’s ability to raise prices to offset declining cigarette shipments, combined with its global reach and growing demand in emerging markets, has helped to drive its success. Moreover, the company’s push toward smokeless tobacco products, including its IQOS heated tobacco system and Zyn nicotine pouches, has contributed to its reaccelerated earnings growth rate.
A Lesson for Investors
Before investing in Palantir Technologies or any other stock, it’s essential to consider the broader market landscape and the strategies employed by top money managers like Stanley Druckenmiller. By taking a closer look at the investments made by Duquesne Family Office, investors can gain valuable insights into the opportunities and challenges presented by different sectors and stocks.
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