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Hedge funds Citadel and D.E. Shaw cut their holdings of Nvidia ahead of this month’s stock market crash, while Renaissance and Marshall Wace increased their holdings, indicating strong differences of opinion among managers over the semiconductor giant’s prospects.
Citadel, the most successful hedge fund of all time, sold about 9 million shares in the second quarter of this year, reducing its holdings from $1 billion at the end of March to $300 million at the end of June, according to U.S. regulatory filings. DE Shaw cut its holdings by more than half to hold $1.4 billion worth of shares by the end of June.
And Paul Singer’s Elliott Management recently sold all of its 50,000 shares after warning investors that Nvidia is in a “bubble” and AI is “overvalued.”
But Renaissance Technologies, a quantitative analytics firm founded by billionaire Jim Simons, bought 1.5 million shares, increasing its holding to 7 million by the end of June, with a market capitalization of $867 million. London-based Marshall Wace bought about 3.7 million shares, valuing its holding at $1.5 billion.
Investor enthusiasm has sent Nvidia’s shares up 150% in the first half of this year after more than tripling last year, as demand to build out artificial intelligence capabilities has prompted big orders for the company’s advanced semiconductors.
But the market crash earlier this month wiped out about $400 billion in value in a matter of minutes as investors panicked over the outlook for the global economy, though the subsequent rebound has since restored some of its June highs.
“Tech stocks have been a haven for investors, but people have been drawn to them in the process,” said Kevin Gordon, senior investment strategist at Charles Schwab & Co., adding that crowded trading “exacerbated the decline.”
The positions were revealed in quarterly U.S. regulatory filings that showed hedge fund holdings as of the end of June. It’s unclear when the funds bought and sold Nvidia shares, for how much, or whether they had changed their positions by the time of the offering in August.
The Financial Times analyzed SEC filings from 23 large hedge funds with a combined total of $1.4 trillion in U.S. stocks. On average, those funds sold about 6% of their Nvidia shares, according to the filings.
Man Group and Two Sigma had acquired a combined 600,000 additional Nvidia shares by the end of June.
Among the other large tech stocks in the so-called “Magnificent Seven,” funds on average increased their positions in Apple and Microsoft, while reducing their holdings somewhat in Alphabet, Amazon, Meta and Tesla.
The filing also revealed that hedge funds Beaupost and Marshall Weiss had acquired $30 million and $20 million worth of Herbalife stock, the multi-level marketing company that Pershing Square’s Bill Ackman failed in a $1 billion short sale more than a decade ago. Shorting a stock means betting that the price will fall.
Herbalife’s shares have fallen sharply in recent years, hitting a 15-year low in the second quarter of this year, and its market capitalization has fallen to about $800 million as it undergoes a restructuring effort.
Meanwhile, funds such as Cube Research have added positions to Robinhood, the retail investing platform that became the center of a boom in “meme stocks” during the coronavirus pandemic.
Shares of GameStop, one of the stocks at the center of the frenzy, soared in the second quarter of this year after investor Keith Gill, known as Roaring Kitty, began posting on X for the first time since 2021 and declared he had a $260 million position in the video game retailer.
Man Group, Marshall Wace, Two Sigma and Renaissance declined to comment. Baupost, Citadel, DE Shaw, Cube and Viking Global did not respond to requests for comment.
