NVIDIA's "faith differentiation": Before the big drop, Citadel and DE Shaw reduced their positions, while Renaissance increased theirs
A "big bet" is playing out, with a huge divergence in the market's valuation and development potential for NVIDIA. Citadel sold about 500,000 shares of NVIDIA stock in the second quarter of this year, while Elliott Management warned that NVIDIA is in a bubble and AI is being excessively hyped. Yet some others are still fervently increasing their positions
"How long can the 'AI faith' last? On this 'gold mine' of NVIDIA, Wall Street giants are engaging in fierce competition, with some buying feverishly while others are eager to sell.
Some well-known hedge funds such as Citadel and DE Shaw reduced their holdings in NVIDIA before the stock price plummeted this month, while Renaissance and Marshall Wace increased their holdings.
Such contrasting attitudes indicate a huge disparity in the market's valuation and growth potential for this AI giant.
A 'gamble' revolving around NVIDIA is unfolding on Wall Street
According to U.S. regulatory filings, the most successful hedge fund Citadel sold approximately 500,000 shares of NVIDIA in the second quarter of this year, reducing its holdings from $60 million at the end of March to $19 million at the end of June.
DE Shaw also reduced its holdings by more than half, reaching a value of $1.4 billion.
Paul Singer's Elliott Management also abandoned its 50,000 shares and warned investors that NVIDIA is in a "bubble" and that artificial intelligence is being "overhyped."
As the 'gamble' unfolds, while some cautiously sell NVIDIA, others choose to fervently increase their positions.
Quantitative firm Renaissance Technologies, founded by billionaire Jim Simons, purchased 1.5 million shares, increasing its holdings to 7 million shares, valued at $867 million by the end of June.
London-based Marshall Wace also purchased approximately 3.7 million shares, with its holdings valued at $1.5 billion.
These investors' bets drove NVIDIA's stock price up by 150% in the first half of this year. Following the release of U.S. retail sales and employment data last night, market confidence in the U.S. economy significantly strengthened, leading NVIDIA's U.S. stock to rise by 4.05%. Currently, NVIDIA's stock price is $122.86, with a market value of $3 trillion.
"Tech stocks are investors' safe haven, and people have been pulled along," said Kevin Gordon, senior investment strategist at Jiaxin Wealth Management, noting that crowded trades "exacerbated the downward pressure on stock prices."
Analysts analyzed filings from 23 large hedge funds submitted to the U.S. Securities and Exchange Commission, showing that on average, they sold about 6% of their NVIDIA shares.
Some hedge funds are starting to focus on other areas
In the Mag7, hedge funds on average increased their positions in Apple and Microsoft, while reducing some holdings in Alphabet, Amazon, Meta, and Tesla While technology stocks and traditional industries remain investment hotspots, some hedge funds are starting to explore new investment opportunities.
Hedge funds Baupost and Marshall Wace have respectively bought $30 million and $20 million worth of Herbalife Nutrition stocks.
Herbalife Nutrition is a company that sells products through a network of distributors. Despite Herbalife's stock price plummeting in recent years and its performance hitting a 15-year low in the second quarter of this year, these two investment firms seem to be more optimistic about its future compared to NVIDIA.
Other hedge funds like Qube Research are shifting their focus towards Robinhood. During the pandemic, Robinhood became the epicenter of the "meme stock" craze.
GameStop is also one of the hot meme stocks, experiencing a significant surge in its stock price in the second quarter of this year due to the influence of social media