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Druckenmiller: IBM 'poster child' of bad corporate growth

Druckenmiller: Here's what's wrong with IBM

Legendary hedge fund manager Stanley Druckenmiller said IBM's recent stock buybacks represent what's wrong with the economic recovery—one fueled by increased debt, not organic growth.

"I would say IBM is the poster child. They literally faced a threat not too dissimilar to what Kodak and Xerox [confronted], in terms of a new technology staring them right in the face. Instead of increasing investment to combat the threat, they've actually borrowed a lot of money to buy back stock," the retired founder of Duquesne Capital Management said Wednesday at the Delivering Alpha conference presented by CNBC and Institutional Investor.

"Let me give you a few shocking statistics," Druckenmiller added. "IBM's sales are where they were six years ago. Despite the increase you saw in sales, industrial production and corporate customers, they've had no increase in sales whatsoever."

IBM did not immediately respond to a request for comment.

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Druckenmiller generally said the U.S. was in a "balance sheet recovery" and that corporations are "more interested in buying back stock and financial engineering than investing in their business."

He extended the thesis to the U.S. government. "In regards to the competitor of the Fed I just presented, they've had no increase in investment or capital spending. What have they increased? Their debt has tripled so they could triple their buyback," he said.

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"This is their response. I don't mean to pick on IBM, but this is the whole U.S. economy. This is what we're doing. Capital spending is the lowest it's been relative to sales in many, many years. That's the reason productivity is down. We've got to get out of this financial engineering stuff and get more into investing in the real economy."

—By CNBC's Lawrence Delevingne