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Jan. 18, 2019, 5:08 p.m. EST

Druckenmiller pushes into cloud stocks, saying they’re disruptive and defensive at the same time

The legendary investor has over $1 billion in cloud companies including Microsoft, Amazon, ServiceNow, Salesforce.com and Workday

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By Stephen McBride


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Adobe is a ‘disruptor’ company that nearly destroyed Xerox and Canon.

Billionaire investor Stanley Druckenmiller might be the greatest investor alive today. His track record is astonishing.

“Druck,” as he’s known, had 30 straight profitable years from 1980 to 2010. During that time, he earned an average of 30% a year. If you took $10,000 and compounded it at 30% a year for 30 years, you’d amass a $26.2 million fortune.

And Druck has never had a losing year. He made money in 2001 during the dot-com crash. And reportedly made $260 million in 2008, while most investors lost their shirts.

So what’s his secret?

‘Long the disruptors’

Druck is low-key and rarely gives interviews. But in one rare interview with Bloomberg, he revealed his secret to success. He said: “We are long the disruptors and short the disrupted … it has worked beautifully.”

Disruptors are not ordinary stocks. They don’t compete with industry leaders. They destroy them. In the process, they often hand investors gains that are far beyond benchmark indexes.

How Adobe steamrolled Xerox and Canon

Take a company such as Adobe /zigman2/quotes/200389143/composite ADBE -0.14% . Its PDF software transformed American offices. Remember Xerox /zigman2/quotes/201169674/composite XRX -0.65% ? It makes those big, clunky paper copiers. Believe it or not, Xerox was once a mighty tech giant. Thirty years ago, it was America’s 20th-largest company.

Today its stock chart is a sad reminder of what it’s like to get steamrolled by a disruptor.

Xerox’s stock peaked at $168 in the late 1990s. Today, it trades for $23.

Canon /zigman2/quotes/210242912/composite CAJ +0.71% , one of the world’s biggest manufacturers of printers, is a victim of Adobe’s disruption, too. In the past decade, printer sales have plunged 30%. And Canon’s stock has been cut in half since 2007. Meanwhile, Adobe stock has surged 600% since 2010. That’s four and a half times better than the S&P 500 Index /zigman2/quotes/210599714/realtime SPX +0.29% .

And if you’d bought Adobe when it was an “early stage” disruptor in the late 1990s, you’d have earned over 20,000%.

/zigman2/quotes/200389143/composite
US : U.S.: Nasdaq
$ 303.74
-0.43 -0.14%
Volume: 2.93M
Dec. 11, 2019 4:15p
P/E Ratio
53.91
Dividend Yield
N/A
Market Cap
$147.24 billion
Rev. per Employee
$445,024
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/zigman2/quotes/201169674/composite
US : U.S.: NYSE
$ 36.52
-0.24 -0.65%
Volume: 1.77M
Dec. 11, 2019 4:10p
P/E Ratio
12.95
Dividend Yield
2.74%
Market Cap
$7.95 billion
Rev. per Employee
$303,395
loading...
/zigman2/quotes/210242912/composite
US : U.S.: NYSE
$ 28.31
+0.20 +0.71%
Volume: 252,950
Dec. 11, 2019 4:10p
P/E Ratio
18.51
Dividend Yield
4.49%
Market Cap
$29.90 billion
Rev. per Employee
$180,925
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/zigman2/quotes/210599714/realtime
US : S&P US
3,141.63
+9.11 +0.29%
Volume: 1.71B
Dec. 11, 2019 5:01p
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