Some Big Hedge Funds Invested in Nvidia — Even After the Stock Surged

Lone Pine, Third Point, Viking, and D1 Capital are among the funds that took their first stakes in the AI company during the second quarter.

Art_NvidiaInvestment_0816.jpg

Illustration by II

The introduction of ChatGPT last November has sent the market on an AI tear, and no company has benefited more than Nvidia, the maker of the superfast chips — or graphics processors — that make the large language model responsible for ChatGPT’s human-like writing possible.

Even so, it took a number of big hedge funds a while to catch on. Several did not jump aboard the Nvidia gravy train until the second quarter — even though shares had already almost doubled in the first quarter. The good news is that while Nvdia’s stock peaked in mid-July and has fallen back slightly, its move appears far from over, as the company has surpassed Wall Street expectations with big players from Elon Musk to Saudi Arabia reportedly trying to get their hands on as many of Nvidia’s chips as possible.

Among Nvidia’s new hedge fund owners in the second quarter are some big names. In order of the size of their holdings, they include Lone Pine Capital, where Nvidia now makes up 2.5 percent of its $11 billion publicly traded equities portfolio, and Third Point, where the stock is 3 percent of the $6.8 billion portfolio of publicly traded equities.

Other new buyers, in descending order of the size of their stakes, include Viking Global Investors, D1 Capital Partners, Senator Investment Group, Suvretta Capital Management, Tiger Global, Valiant Capital Partners, Soros Fund Management, Aristides Capital, Brevan Howard, and Oasis, according to just-released second quarter 13F filings of investment managers with the Securities and Exchange Commission.

Nvidia shares jumped another 50 percent during the quarter of this furious buying. The stock is now up around 200 percent for the year, as it is one of a handful of technology stocks expected to benefit from the AI movement that is driving the market’s resurgence in 2023.

That’s particularly good news for those who bought earlier. As Institutional Investor previously reported, at year-end, Nvidia ranked as the twelfth-most widely held stock among all hedge funds, according to SEI Novus. At that time, some 186 hedge fund investors held a position in the stock, with 51 new investors getting into the stock during that period and only 26 bailing on it completely, according to the SEI Novus database.

Sponsored

Some of those who got in earlier took some profits last quarter.

Nvidia remains the biggest holding of Coatue Management, accounting for some 9 percent of its $20 billion publicly traded equity portfolio. Coatue’s Nvidia position, which is valued at about $2 billion, is the biggest hedge fund investment in Nvidia, even though the manager sold 6 percent, or 232 shares during the quarter.

D.E. Shaw Group is the next biggest hedge fund investor, owning a stake worth $1.89 billion after bumping up its holdings of the stock by some 231 percent during the quarter.

Nvidia had been the second largest holding of WhaleRock at the end of the first quarter, but it slipped to third as the hedge fund sold 7 percent of its shares. Other sellers included Citadel Advisors, which sold 55.5 percent; Moore Capital, which unloaded some 37 percent of its Nvidia shares; and Two Sigma, selling 73 percent of its holdings.

Element Capital and 3G Capital sold out entirely.

A number of pension funds are among the biggest investors in Nvidia, and they also took profits as the stock surged during the quarter.

These include the Canadian Pension Plan Investment Board, California Public Employees’ Retirement System, California State Teachers’ Retirement System, the New York State Teachers’ Retirement System, the Public Employees Retirement Association of Colorado, the Public Employees Retirement System of Ohio, the State of Wisconsin Investment Board, and the Employees Retirement System of Texas.

Related