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A clutch of big-name hedge funds have made huge gains in the opening weeks of 2024 after well-timed decisions to increase their bets on chipmaker Nvidia late last year, even after the shares had already soared in price.
Boston-based Arrowstreet Capital bought almost 4mn shares in Nvidia in the fourth quarter, building its position to $2.1bn by the end of the year, according to regulatory filings. The company will have made a profit of at least $1bn so far this year on its holding, assuming it was maintained.
Nvidia had already become a favourite holding of the hedge fund industry during its blistering rally of the past year. But, despite warnings of a bubble from some commentators, the fourth-quarter filings show that many big-name funds continued to ramp up their bets on further gains.
The stock has soared 48 per cent so far this year after more than tripling in 2023, as demand for artificial intelligence drives huge orders for the company’s advanced semiconductors.
The stock overtook Alphabet on Wednesday to become the third most valuable company on Wall Street, ahead of its hotly anticipated fourth-quarter earnings report, due next week.
Among other funds to have profited from Nvidia is Bridgewater Associates, the world’s largest hedge fund. The company quadrupled its holdings in the stock in the fourth quarter, adding more than 220,000 shares. It would have made a profit of more than $65mn to date in 2024 if it held on to its position.
Chris Rokos’s Rokos Capital Management, which picked up more than 250,000 shares in Nvidia in the last quarter, appears to have earned a profit of more than $60mn on the chipmaking giant’s shares.
Meanwhile, Renaissance Technologies, one of the world’s most successful hedge funds, bought more than 300,000 shares in the last quarter, bringing its total holdings to more than 1.5mn shares. Total gains on the fund’s holdings of the stock so far this year are likely to have exceeded $375mn if its position was maintained.
However, other major hedge funds may have missed out on some profits by trimming their holdings of Nvidia too soon.
D1 Capital Partners sold more than 146,000 shares in the fourth quarter, while Coatue cut its stake by almost 219,000 shares. Chase Coleman’s Tiger Global sold 142,900 shares as it cut its holdings in several of the so-called Magnificent Seven stocks, which include Nvidia, while piling into Taiwanese chipmaker TSMC with almost 1mn new shares.
Bets on US chipmaker Intel may have proven less successful. The company’s stock price has tumbled 12.3 per cent since the beginning of the year after the company’s revenue forecast for the first quarter of the year fell short of Wall Street’s estimates by as much as $2bn. Coatue, Arrowstreet and Renaissance were among the funds that added to their positions in the fourth quarter.
Arrowstreet Capital, Renaissance Technologies, and Rokos Capital Management declined to comment. Coatue, D1, Tiger Global and Bridgewater Associates did not respond to requests for comment.