Billionaire Stanley Druckenmiller Sold Palantir And Bought This Stock Instead

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Billionaire investment legend Stanley Druckenmiller is quickly becoming one of my favorite big-money managers to follow quarter to quarter. He’s not just limiting himself to value stocks, but has shown a knack for spotting opportunities within the high-tech, hyper-growth corners of the stock market, as demonstrated by his previous buy of Palantir (NASDAQ:PLTR) stock, which he’s now completely sold out of.

That said, with CEO Alex Karp selling shares, I think it’s only wise to take big profits where there are big profits to be had. And with shares of the big data AI firm pulling back close to 10% last week as the S&P 500 blasted off to hit a new all-time high, the overheated, overbought name certainly looks to be getting a bit toppy. Either way, Druckenmiller has booked profits and has been busy putting it to work in other opportunities in the first quarter. 

Druckenmiller scoops up dirt-cheap shares of Teva Pharmaceuticals in the first quarter

The most notable move from Druckenmiller in Q1 has to be the boosting of his stake in Israeli drugmaker Teva Pharmaceuticals (NYSE:TEVA), which is now his fund’s second-largest holding with a 7.7% weighting. For the first quarter, Druckenmiller’s fund hiked its position by more than 65% (which works out to around 5.9 million shares).

Undoubtedly, Teva stands in stark contrast to Palantir, one of the most explosive momentum stocks in the tech sector. While shares of Teva have enjoyed some nice newfound momentum in the past two years, now up 123% in the timespan, the longer-term picture doesn’t look nearly as pretty.

Around a decade ago, the stock fell off a cliff, shedding close to 90% of its value from peak to trough. After spending a few years fluctuating wildly in the single digits and low teens, the name may have been viewed as dead money by most, but a deep-value play by other, more patient investors. With newfound momentum to get behind and a huge vote of confidence from Druckenmiller, Teva now seems worthy of a second look for investors who may have forgotten about it since its catastrophic implosion.

So, is the long-time laggard finally ready to come back to life? Or is the latest two-year rally going to pave the way for another painful pullback?

Teva’s new products are enjoying impressive growth

Teva’s recent quarters unveiled strength in a number of its branded drugs, which are now growing at an impressive double-digit pace. Indeed, the company’s “Pivot to Growth” efforts are showing early signs of paying off. With impressive margin gains and respectable growth from its innovative medicines to help the firm save around $700 million by 2027, the stage certainly seems set for continued gains. 

Recently, Goldman Sachs (NYSE:GS) analyst Matt Dellatorre praised Teva as a buy, citing improvement in the firm’s core business and strong growth to be had from the branded portfolio. With a $24.00 price target, which is $6.00 shy of the current Wall Street high, Teva could be looking at a 44% gain from Friday’s closing price if all goes well over the next year or so. In any case, I think Druckenmiller will be proven right again, as Teva continues putting up the solid quarters while convincing a number of Wall Street analysts to change their tune on a name that’s been dragging its feet for far too long.

The bottom line: Teva stock looks dirt-cheap, with plenty of support behind its impressive rally

With a 6.37 times forward price-to-earnings (P/E) multiple, perhaps it’s no mystery as to why so many Wall Street pros and a legend in Druckenmiller are bullish on the name. Teva’s growth pivot is well underway, and its stock may very well be subject to further multiple expansion as the fallen pharma firm looks to make up for lost time in the second half.

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