Unlocking the Secrets of Billionaire Investors
November was a busy month on Wall Street, with a flurry of important data releases, election day, and earnings season. Amidst the chaos, investors may have overlooked a crucial deadline – the November 14th filing of Form 13F with the Securities and Exchange Commission. This quarterly filing provides a snapshot of the stocks held by institutional investors with over $100 million in assets under management.
The Oracle of Omaha and Beyond
Warren Buffett’s Berkshire Hathaway is always highly anticipated, but he’s not the only billionaire money manager worth watching. Steven Cohen, founder of Point72 Asset Management, is another influential investor who made significant moves in the artificial intelligence (AI) space during the third quarter.
A Shift in Focus
Cohen’s fund dumped its entire position in Super Micro Computer, a leading provider of customizable rack servers and storage solutions. This move came before Supermicro completed its 10-for-1 stock split in September. Despite the company’s strong performance, with sales surging 110% to nearly $15 billion in fiscal 2024, Point72 opted to exit.
Red Flags
Several factors contributed to Point72’s decision. In August, short-seller Hindenburg Research accused Supermicro of “accounting manipulation, sibling self-dealing, and sanctions evasion.” Although the company denied the allegations, it delayed filing its annual report and is facing an early-stage probe by federal regulators. Additionally, Supermicro’s auditor, Ernst & Young, resigned in October, citing concerns about internal controls.
Nvidia Takes Center Stage
Meanwhile, Cohen’s fund invested heavily in Nvidia, purchasing 1,574,796 shares during the third quarter. This increased Point72’s stake in the AI leader by 75%. Nvidia’s hardware is in high demand, particularly its flagship H100 GPU and successor Blackwell GPU architecture. The company’s CUDA platform has also helped maintain its market dominance.
Challenges Ahead
While Nvidia appears to be a slam-dunk investment, there are potential pitfalls to consider. The company may lose its pricing power and GPU scarcity advantages as competitors like Advanced Micro Devices ramp up production. Additionally, Nvidia’s largest customers are developing their own AI-GPUs, which could erode the company’s market share. Historically, game-changing technologies have experienced early-stage bubbles, and AI may be no exception.
Investor Insights
Before investing in Nvidia or any other AI stock, it’s essential to consider the bigger picture. The Motley Fool Stock Advisor team has identified what they believe are the 10 best stocks for investors to buy now. While Nvidia wasn’t on the list, the service provides a comprehensive blueprint for success, including guidance on building a portfolio, regular updates, and two new stock picks each month.
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