Stanley Druckenmiller is a hedge fund legend who ran various hedge funds for more than three decades. He’s a household name today because he had a remarkably profitable run that almost never experienced a down year. He first made waves in the 1990s and continued making his mark with his own Duquesne Capital Management in the 2000s. Druckenmiller quit Duquesne in 2010 to manage his own money and devote time to his family and passions.
Stanley Druckenmiller is a native of Pittsburgh, though he graduated from a prep school in Virginia while living with his father, who had divorced his mother several years earlier. From a middle class background, Druckenmiller operated a hot dog stand to make extra money while an undergraduate at Bowdoin College in Maine. He studied economics and graduated with an economics degree in 1975.
He then went to the University of Michigan to get a Ph.D. in economics but dropped out to go to work at Pittsburgh National Bank as an equity analyst in 1977. He made his mark immediately and moved quickly up the ladder, becoming the bank’s research director a year later.
Druckenmiller left PNB to found Duquesne Capital three years later in 1981, putting to use his economics and equity background. While still running his hedge fund, he was hired by Dreyfus as a consultant and then as head of their Dreyfus Fund. He had enough success at Dreyfus that he attracted the attention of none other than George Soros and, in 1988, he went to work as chief strategist at Soros while still running Duquesne.
Breaking the Bank (of England)
In 1992, Stanley Druckenmiller rose to fame when the British pound plummeted. Leading up to the devaluation, he was certain that the Bank of England wouldn’t raise its rates even though it didn’t have enough foreign currency to support the either the wobbling economy or the struggling pound.
He was right on both counts, and the pound plunged. Additionally, due to the low interest rates, British stocks soared. It’s thought that Druckenmiller made hundreds of millions from it all.
Druckenmiller Narrows His Focus
Stanley Druckenmiller left Soros in 2000 to devote his full time and energy to running Duquesne Capital. He continued making money for himself as well as for his clients until 2010, thought to be Duquesne’s only down year while Druckenmiller was at the helm. Even accounting for the down year, Duquesne averaged 30% in returns every year.
The down year was enough for Druckenmiller to get out. He closed down the Duquesne fund, even though at the time it was managing $12 billion in assets, because he felt that he couldn’t continue living up to his own high standards of investing and getting high returns with such a high sum of money. He also thought that more than 30 years in the game was enough, so he closed down the fund.
Philanthropy, the Steelers, and His Big Regret
Stanley Druckenmiller spends much of his time these days engaged in two of his biggest passions – philanthropy and the Pittsburgh Steelers of the NFL. Druckenmiller has bestowed millions upon his alma mater, Bowdoin, and he and his wife have a charitable organization called the Druckenmiller Foundation, which funds education, medical research, and the fight against poverty. He also donates to various medical research and children’s causes.
As many Pittsburgh natives are, Druckenmiller is a devoted fan of the Steelers football team; unlike nearly all other Pittsburgh natives, though, he almost became a minority owner of the franchise in the late 2000s. He was approached as a possible investor by the Rooneys, the family that owns the franchise, and for a short period, it was expected that Druckenmiller would agree to become a part-owner, but he eventually withdrew from consideration.
Whereas many uber-successful investors aren’t afraid to splash the front pages, Druckenmiller is famously headlines-shy. In fact, he doesn’t publicly say much about anything these days. Much of this stems from an incident in 1994, when he gave his perspective on a bond issue to lawmakers, which threw him into the middle of a budget fight in D.C. as well as into the limelight.
Another incident attributed to his current state of reticence is also one of his biggest regrets. In 2004-05, Druckenmiller warned policymakers on several occasions that the subprime lending craze enveloping the country at the time was paving the way for a huge economic problem that would devastate the financial system. However, these policymakers didn’t agree with or even like what he had to say, so he didn’t make it public, only to watch in horror as he was proven correct later. Not going public to warn people is something he regrets.
Druckenmiller continues to keep private and manage his own money and investments. Although he seems content with his current place, perhaps he’ll emerge again with cogent insights on finances and the market that will benefit the investing world.