Druckenmiller Buys KRE, Sells NVDA

The former hedge fund manager Stanley Druckenmiller's $3 billion Duquesne Family Office recently adjusted his portfolio by purchasing two-million shares of the SPDR S&P Regional Banking ETF (KRE) and selling his remaining shares of Nvidia (NVDA).  

This move reflects a shift from high-growth tech stocks to sectors poised to benefit from broader economic recovery or stability, such as regional banking.  

Druckenmiller's sale of NVDA comes as the stock faces valuation concerns ahead of its widely anticipated earnings call Wednesday, while his KRE investment aligns with expectations of a rebound in regional banks, particularly following adjustments in interest rate policies and improving economic conditions. 

Druckenmiller’s biggest position is Natera, Inc. (NTRA), receiving a 15% portfolio allocation, according to his 13F filing to the Securities Exchange Commission. NTRA is a biotechnology company specializing in cell-free DNA testing. The stock is up 180% over the past 12 months. 

Why Is Druckenmiller Buying KRE, a Regional Bank ETF?

While his Duquesne Family Office 13F filing does not state reasons for buying shares of KRE in Q3, Stanley Druckenmiller's decision to invest in the regional bank ETF likely reflects a bet on the recovery potential of regional banks, which have faced challenges due to rising interest rates and economic uncertainties. 

In early 2023, regional banks faced significant turmoil, driven by the collapse of Silicon Valley Bank (SVB) and Signature Bank, which triggered fears of broader instability in the banking sector. These failures resulted from rising interest rates that devalued long-term assets on bank balance sheets and led to liquidity crises as depositors withdrew funds. The turmoil prompted regulatory intervention and increased scrutiny of risk management practices across the industry, leading to a selloff in regional bank stocks and heightened concerns about financial system stability. 

Since the Federal Reserve has cut interest rates by 75 basis points since September, Druckenmiller may view the regional sector as undervalued and positioned for an extended rebound, particularly if economic conditions continue to stabilize or improve. 

Additionally, while risk and uncertainty remain, KRE provides diversified exposure to regional banks, which can benefit from local economic resilience, easing financial pressures, or regulatory adjustments that support banking profitability.