Citadel and DE Shaw reduced Nvidia holdings before the market meltdown

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Hedge funds Citadel and DE Shaw cut stakes in Nvidia ahead of this month’s aftermarket session, while Renaissance and Marshall Wace added to positions, in a sign of stark divisions among managers over the outlook for the chip giant .

Citadel, the most successful hedge fund of all time, shed about 9 million shares in the second quarter of this year to bring its holdings to $300 million at the end of June, down from $1 billion dollars at the end of March, according to US regulatory filings. DE Shaw cut its holding by more than half to $1.4 billion by the end of June.

And Paul Singer’s Elliott Management, which recently warned investors that Nvidia was in a “bubble” and AI was “overhyped,” divested its entire 50,000-share holding.

However, quantitative firm Renaissance Technologies, founded by billionaire Jim Simons, picked up 1.5 million shares, bringing 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.

Frantic investor interest pushed Nvidia up 150% in the first half of this year after shares tripled last year as demand to develop artificial intelligence capabilities drove huge orders for the company’s advanced semiconductors.

But in the market rout earlier this month, it lost around $400 billion in value in minutes as investors panicked over the outlook for the global economy, although the subsequent rally clawed back some of the ground. at the maximum since June.

“Tech stocks have been a haven for investors and people have been pulled in along the way,” said Kevin Gordon, senior investment strategist at Charles Schwab, adding that the crowded trade “exacerbated (the stock price’s) move down.”

The positions were disclosed in quarterly US regulatory filings, providing a snapshot of hedge fund holdings at the end of June. It is unclear when and at what price the funds traded Nvidia shares and whether they changed their positions by the time of the August sale.

The Financial Times reviewed SEC filings from 23 major hedge funds that hold a total of $1.4 billion in U.S. stocks. On average, they sold about 6 percent of their stakes in Nvidia, the filings showed.

Man Group and Two Sigma together picked up another 600,000 Nvidia shares by the end of June.

Among other members of the so-called Magnificent Seven mega-cap tech stocks, the funds on average added positions in Apple and Microsoft, while shedding some holdings in Alphabet, Amazon, Meta and Tesla.

The filings also show that hedge funds Baupost and Marshall Wace took stakes worth $30 million and $20 million, respectively, in Herbalife, the multi-level marketing company that was the subject of a short bet of $1 billion from Bill Ackman of Pershing Square. decade ago. Shorting means betting on a lower price for a stock.

Herbalife shares have tumbled in recent years, hitting a 15-year low in the second quarter of this year, while its market capitalization has fallen to about $800 million as the business undergoes a restructuring.

Elsewhere, funds including Qube Research have built positions in Robinhood. The retail investment platform was at the center of the “meme stock” frenzy during the coronavirus pandemic.

Shares in Gamestop, one of the stocks at the center of the frenzy, surged 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, 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.