Stanley Druckenmiller Loaded Up On Regional Banks Ahead Of Trump's Election Win

Billionaire investor and former hedge fund manager Stanley Druckenmiller, a confidant of George Soros, is well known for his top-down investment style and for paying close attention to macroeconomic factors.

One of his recent wagers seemingly predicted the 2024 U.S. presidential election ahead of time.

What Happened: According to a 13f filing on Sept. 30, Druckenmiller’s Duquesne Family Holdings purchased 2,053,323 shares of the SPDR S&P Regional Banking ETF KRE during the quarter. This now carries a market value of around $123 million. The investment represented 3.9% of Duquesne’s total portfolio.

The ETF tracks regional bank stocks across the U.S. Unlike large banks, regionals have smaller asset bases, are subject to less regulation and operate in only one region or state.

Regional banks could be poised for strong legislative tailwinds following President-elect Donald Trump‘s inauguration in January. Trump’s first term brought deregulation of regional banks and several rollbacks of Obama-era banking policy following the 2008 banking crisis. On the flip side, deregulation poses a risk to the financial sector if lax standards lead to crises.

The ETF is trading 6% higher than it did on Sept. 30. On the Wednesday following election day, the ETF traded up over 13% in a single trading period, reflecting market optimism over the industry’s prospects under a second Trump administration.

Why It Matters: Druckenmiller’s investment before the election could be seen as a prescient bet that Trump would win. In October, Druckenmiller said that the market was “very convinced” of a Trump victory.

It is unclear whether the Bowdoin College and University of Michigan alumnus bought more shares of the ETF between the third-quarter reporting date and the election.

Price-to-book metrics are generally considered more relevant to analyzing bank market valuations. On Monday, the Regional Bank ETF traded 1.1 times its book value.

Wall Street’s valuation of regionals has largely rebounded since 2023’s banking crisis, which saw Silicon Valley Bank and First Republic Bank go under. The ETF traded 0.7 times above the book value in April of 2023. During Trump’s first term, the ETF traded as high as 1.6 times above book value, reflecting market confidence.

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• Stanley Druckenmiller’s Top Holding Has Outperformed Its Sector By 252%

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