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Investors on Wall Street are constantly inundated with data, from monthly economic reports showcasing employment figures and inflation rates to a barrage of earnings reports from countless publicly traded companies. This deluge of information can often lead to important announcements being overlooked.
In mid-August, one such significant disclosure may have slipped by unnoticed.
Unveiling the 13F Filings
On August 14, institutional investors managing assets worth at least $100 million submitted their Form 13F to the Securities and Exchange Commission. These filings offer an insightful glimpse into the buying and selling activities of Wall Street’s top money managers during the most recent quarter, which, in this case, ended in June. Form 13Fs shed light on the stocks, industries, sectors, and trends that have captivated the attention of leading asset managers.
Key Moves by Billionaire Investors in the Second Quarter
The second quarter marked a period of heightened activity for billionaire investors. While artificial intelligence (AI) has been a hot topic on Wall Street, many high-profile investors were found selling shares of Nvidia (-1.02%)—a prominent AI company—and instead, investing heavily in two other trillion-dollar giants.
Nvidia: A Continued Trend of Selling
For the third consecutive quarter, billionaire investors were seen divesting from Nvidia, a leading AI stock. This trend involved more than half a dozen notable investors reducing their stakes. Those who sold Nvidia shares in the second quarter included:
– Ken Griffin of Citadel Advisors (9,282,018 shares)
– David Tepper of Appaloosa (3,730,000 shares)
– Stanley Druckenmiller of Duquesne Family Office (1,545,370 shares)
– Cliff Asness of AQR Capital Management (1,360,215 shares)
– Israel Englander of Millennium Management (676,242 shares)
– Steven Cohen of Point72 Asset Management (409,042 shares)
– Philippe Laffont of Coatue Management (96,963 shares)
Nvidia’s stock has soared by 715% since the beginning of 2023, as of the closing bell on September 13, 2024. While profit-taking is one plausible reason for these investors to reduce their holdings, other factors may be at play. Historically, groundbreaking innovations and technologies have often succumbed to early-stage bubbles over the past 30 years. Investors tend to overestimate the adoption and utility of such new technologies, leading to growth forecasts that fall short of expectations. Furthermore, Nvidia faces competition from both external rivals and its top customers, who are developing their own AI-graphics processing units (GPUs). The lack of insider purchases since December 2020 also raises concerns.
Shifting Focus: Amazon and Microsoft
During the same period, billionaire investors were actively acquiring shares of two other trillion-dollar companies.
Amazon: A Strategic Pick
Amazon (1.08%), part of the “Magnificent Seven,” was a favorite among investors in the June-ended quarter. Billionaire asset managers who purchased Amazon shares included:
– Ole Andreas Halvorsen of Viking Global Investors (2,391,262 shares)
– Ray Dalio of Bridgewater Associates (1,597,676 shares)
– Ken Fisher of Fisher Asset Management (1,214,055 shares)
– Ken Griffin of Citadel Advisors (1,114,948 shares)
– Philippe Laffont of Coatue Management (702,235 shares)
While Amazon is widely recognized for its consumer-facing online marketplace, the true driver of its financial success is Amazon Web Services (AWS), its leading cloud infrastructure service. AWS saw a 19% year-over-year growth in the second quarter, and it remains a major contributor to Amazon’s operating income. Additionally, Amazon’s advertising and subscription services continue to generate significant cash flow and double-digit sales growth. Despite its high price-to-earnings (P/E) ratio, Amazon’s valuation, based on cash flow estimates for 2025, is more favorable compared to its historical cash flow multiples.
Microsoft: Embracing AI and Legacy Strengths
Microsoft (0.88%) was another stock that billionaire investors favored over Nvidia. In the second quarter, eight billionaire fund managers acquired Microsoft shares, including:
– Ken Fisher of Fisher Asset Management (1,340,392 shares)
– Ole Andreas Halvorsen of Viking Global Investors (695,444 shares)
– Ray Dalio of Bridgewater Associates (510,822 shares)
– Israel Englander of Millennium Management (240,624 shares)
– John Overdeck and David Siegel of Two Sigma Investments (177,726 shares)
– Stephen Mandel of Lone Pine Capital (90,287 shares)
– Philippe Laffont of Coatue Management (20,684 shares)
Microsoft’s strong ties to artificial intelligence have fueled investor interest. The company is a significant investor in OpenAI, the creator of ChatGPT, and it is integrating AI solutions into its Bing search engine and Edge web browser. Additionally, Azure, the world’s second-largest cloud infrastructure service, is incorporating AI capabilities to enhance its growth prospects. Despite the potential for an AI bubble, Microsoft benefits from its robust legacy segments, such as Windows and Office, which provide stable cash flow. With a substantial cash reserve and strong operating cash flow, Microsoft has the financial flexibility to pursue strategic acquisitions and expand its product ecosystem.
Don’t Miss Out on a Second Chance
Have you ever felt like you’ve missed the opportunity to invest in the most successful stocks? Now is your chance to act.
Occasionally, our expert team of analysts issues “Double Down” stock recommendations for companies poised for significant growth. If you’re concerned about missing out, now is the perfect time to invest. The results speak for themselves:
– Nvidia: A $1,000 investment when we doubled down in 2009 would be worth $302,792!*
– Apple: A $1,000 investment when we doubled down in 2008 would be worth $40,922!*
– Netflix: A $1,000 investment when we doubled down in 2004 would be worth $375,616!*
Currently, we’re issuing “Double Down” alerts for three exceptional companies, and this opportunity may not come around again.
See 3 “Double Down” stocks ›
*Stock Advisor returns as of 09/18/2024
