Billionaire Philippe Laffont’s Surprising Moves in the AI Space
As the dust settles on Election Day and earnings season, investors are left to sift through a flurry of important filings. One such filing that may have flown under the radar is the Form 13F, which reveals the stock purchases and sales of institutional investors with over $100 million in assets under management.
Warren Buffett’s Trading Activity Closely Watched
Warren Buffett, the legendary CEO of Berkshire Hathaway, is no stranger to making headlines with his investment moves. With a cumulative return of over 5,800,000% in his company’s Class A shares since taking the reins in the 1960s, investors hang on his every trade. However, he’s not the only billionaire money manager with a successful track record and a following on Wall Street.
Philippe Laffont’s Coatue Management Makes Waves
Billionaire Philippe Laffont, founder of Coatue Management, has built a reputation for his focus on high-growth and innovative businesses in the tech space. With nearly $27 billion in assets under management, his fund’s concentrated portfolio of 81 holdings is closely watched by investors. Recent trades have raised eyebrows, as Laffont has been selling shares of two artificial intelligence (AI) leaders and piling into a top-performing stock-split stock.
AI Leaders Nvidia and AMD See Shares Sold
Laffont’s Coatue Management has sold a significant chunk of its shares in Nvidia and Advanced Micro Devices, two of Wall Street’s top AI stocks. Accounting for Nvidia’s historic 10-for-1 stock split in June, Coatue has sold 39,663,859 shares over an 18-month stretch, representing an 80% reduction in its position. As for AMD, Laffont has overseen the sale of 4,249,190 shares over the same period, a 50% reduction in its stake.
Catalysts for Selling AI Stocks
So, why is Laffont reducing his exposure to these AI leaders? History may offer one compelling reason. Every next-big-thing innovation needs time to mature, and we’re just not there yet with artificial intelligence. If the AI bubble were to burst, Nvidia and AMD would likely take a hit. Additionally, concerns about gross margin may be driving Laffont’s decisions. With AMD ramping up production of its Insight MI300X GPUs and introducing its next-generation MI325X GPU, scarcity should wane, reducing pricing power and gross margin for both companies.
Insiders’ Lack of Encouragement
Insiders have provided little encouragement for investors, with no insider purchases on the open market at Nvidia in almost four years and no company executive or director at AMD buying shares in over a half-decade. If insiders don’t see value in their company’s stock, why should investors?
Chipotle Mexican Grill: A Tasty Alternative
While Laffont has been selling AI stocks, he’s been piling into shares of Chipotle Mexican Grill, a top-performing consumer brand that completed a historic 50-for-1 stock split in June. According to Coatue’s 13F, 4,575,054 shares of Chipotle were purchased during the third quarter, making it the 30th-largest position in Laffont’s nearly $27 billion portfolio. With a solid foundation of trust, pricing power, and innovation, Chipotle has delivered impressive gains of almost 13,900% since its initial public offering price of $22 in January 2006.
Concerns for Chipotle’s Future
However, Chipotle’s path forward is clouded by the departure of its CEO, Brian Niccol, to Starbucks and concerns about its valuation. Trading at an ultra-aggressive multiple of 47 times forward-year earnings, it’s difficult to envision much near-term upside for its shares.
What’s Next for Investors?
As investors digest Laffont’s surprising moves, they may want to take a closer look at the billionaire’s investment strategy and consider their own exposure to AI leaders and consumer brands like Chipotle Mexican Grill.
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