In the world of high finance, quarterly reports and data releases can sometimes get lost in the noise. However, one recent data dump stands out as particularly significant. On August 14, institutional investors and asset managers were required to file Form 13F with the Securities and Exchange Commission, revealing their quarterly stock purchases and sales. Among the notable transactions was the activity of billionaire Philippe Laffont, founder of Coatue Management, a hedge fund focused on high-growth tech stocks.
Laffont’s fund, which oversees over $25 billion in assets across 74 holdings, made some striking moves in the latest quarter. Most notably, he continued to sell off shares of Nvidia, a former top holding, and invested heavily in a company that dominates two industries. As of the end of the second quarter, Coatue Management held only 13.7 million shares of Nvidia, a 72% decline from 15 months prior.
The selling spree may be attributed to profit-taking, given Nvidia’s remarkable 750% surge in value since the start of 2023. However, there may be more to the story. Historically, game-changing innovations and technologies have experienced early innings bubbles, which eventually burst as investors realize the time it takes for widespread adoption. Additionally, Nvidia’s management team has not inspired confidence, with no insider buying since 2020.
Meanwhile, Laffont has been piling into Amazon, a company that boasts a strong presence in two industries. With over 10.7 million shares, Amazon is now Coatue’s second-largest holding, accounting for more than 7% of invested assets. Amazon’s dominance in e-commerce is well-known, but its true value lies in its ancillary segments, including Amazon Web Services (AWS), advertising services, and subscription services. AWS, in particular, has a significant market share and is poised to benefit from the growing demand for cloud infrastructure and AI solutions.
Amazon’s historically low valuation, with a price-to-cash-flow ratio of less than 13, makes it an attractive investment opportunity. In contrast, Nvidia’s valuation has skyrocketed, making it a less compelling choice for Laffont and his team. As the AI revolution continues to unfold, it will be interesting to see how these two tech giants perform in the coming quarters.
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