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Hedge funds Citadel and DE Shaw trimmed their holdings in Nvidia ahead of this month’s stock market crash, while Renaissance and Marshall Wace added to their positions, reflecting sharp divisions among managers over the chipmaker’s prospects.
Citadel, the most successful hedge fund of all time, sold about 9 million shares in the second quarter of this year, bringing its holding to $300 million at the end of June, down from $1 billion at the end of March, according to U.S. regulatory filings. DE Shaw more than halved its holding to $1.4 billion in shares by the end of June.
And Paul Singer’s Elliott Management, which recently warned investors that Nvidia was in a “bubble” and that artificial intelligence was “overvalued,” dumped its entire 50,000 shares of stock.
However, quantitative firm Renaissance Technologies, founded by billionaire Jim Simons, raised 1.5 million shares, taking its position to 7 million shares, worth $867 million, by the end of June. London-based Marshall Wace bought about 3.7 million shares to value its stake at $1.5 billion.
Frenzied investor interest has pushed Nvidia up 150 percent in the first half of this year, aVsceker its shares more than tripled last year, as demand for its artificial intelligence capabilities has driven huge orders for the company’s advanced semiconductors.
But during the market meltdown earlier this month, it lost about $400 billion in value in a matter of minutes as investors panicked over the outlook for the global economy, although the subsequent rebound recovered some ground from its June high.
“Tech stocks were a haven for investors and people were being dragged along the way,” said Kevin Gordon, senior investment strategist at Charles Schwab, adding that the crowded trade “exacerbated [share price] moves downwards”.
The positions were disclosed in quarterly U.S. regulatory filings that provide a snapshot of hedge funds’ holdings as of late June. It’s unclear when and at what price the funds traded Nvidia shares, and whether they had changed their positions by the time of the August sell-off.
The Financial Times analyzed SEC filings from 23 major hedge funds that hold a combined $1.4 trillion in U.S. stocks. On average, they sold about 6 percent of their Nvidia holdings, the filings showed.
By the end of June, Man Group and Two Sigma had acquired a total of 600,000 additional Nvidia shares.
Among other large-cap technology stocks, the so-called Magnificent Seven, on average increased positions in Apple and MicrosoVscek, while eliminating some holdings in Alphabet, Amazon, Meta and Tesla.
The documents also reveal that hedge funds Baupost and Marshall Wace have picked up $30 million and $20 million, respectively, in shares of Herbalife, the multilevel marketing company that was the subject of an ill-fated $1 billion short bet by Pershing Square’s Bill Ackman more than a decade ago. Going short means betting on a stock’s price going down.
Herbalife shares have tumbled in recent years, hitting a 15-year low in the second quarter of this year, while the market cap has fallen to about $800 million as the company restructures.
Elsewhere, funds including Qube Research have built positions in Robinhood. The retail investment platform has been at the center of a “meme stock” frenzy 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 aVsceker investor Keith Gill, known as Roaring Kitty, began listing on X for the first time since 2021 before declaring a $260 million position in the video game retailer.
Man Group, Marshall Wace, Two Sigma and Renaissance declined to comment. Baupost, Citadel, DE Shaw, Qube and Viking Global did not respond to a request for comment.
