Key Takeaways
- In the fourth quarter of 2024, numerous hedge fund investors prioritized tech stocks for their artificial intelligence potential, as evidenced by quarterly 13F filings.
- However, prominent investors like Warren Buffett and Dan Loeb took a different approach, reducing their tech exposure while increasing investments in energy and utilities companies.
- Consumer-related stocks experienced decreased interest among investors, with notable reductions observed in sectors such as airlines, automakers, fast food restaurants, and home improvement retailers.
- Nvidia, a leading tech company, submitted its first 13F filing, revealing investments in five publicly traded companies, signaling a shift in its investment strategy.
Last week, some of the most prominent figures in the investment world, including Warren Buffett, Bill Ackman, David Tepper, Dan Loeb, and others, disclosed their holdings in required quarterly filings with the Securities and Exchange Commission. These Form 13F filings are closely monitored to gain insights into which companies and sectors are favored or avoided by influential and successful investors.
It’s crucial to understand that these filings, mandatory for institutional investors managing over $100 million in assets, represent stock positions held by money managers as of the end of December. They do not reflect any subsequent changes, nor do they reveal the acquisition price of shares or profits from their sale.
Investment Frenzy: Big Players Dive Into Tech and AI Opportunities
Billionaires are showing strong confidence in the technology sector, with many opting to invest heavily in companies like Amazon (AMZN), Nvidia (NVDA), and Intel (INTC) due to high expectations surrounding artificial intelligence.
One notable example is Bridgewater Associates, the hedge fund founded by Ray Dalio, which significantly increased its exposure to Nvidia. The fund’s holdings in Nvidia surged nearly six-fold to 268,489 shares compared to the previous quarter.
According to a Bloomberg analysis of 13F filings, approximately 158 institutional investors collectively added around 14.6 million Amazon shares, valued at $21.6 billion, during the three months ending in December. However, an equal number of investors either exited their positions in Amazon or reduced their holdings in the company.
Energy, Utilities Trumped Tech For Some
Not everyone followed the tech trend in their investment strategies. Warren Buffett’s Berkshire Hathaway (BRKA) (BRKB) opted out of holding a stake in Nvidia and reduced its holdings in Apple (AAPL), instead choosing to increase its positions in Chevron (CVX) and Occidental Petroleum (OXY), indicating a pivot towards the energy sector.
Similarly, Dan Loeb’s Third Point divested its entire stake in Google-parent Alphabet (GOOG) (GOOGL) and decreased exposure to Microsoft (MSFT), Amazon, and Taiwan Semiconductor Manufacturing Co. (TSM). Third Point shifted its focus to energy investments, adding positions in PG&E Corp (PCG) and Vistra Corp (VST). Additionally, the fund initiated a new position in hydrocarbon exploration firm EQT Corp. (EQT).
This divergence from the tech sector underscores a broader trend among investors favouring energy and utilities over technology.
Consumer Stocks Lose Shine: Insights into Shifting Investor Preferences
Persistent inflation and high interest rates in the U.S. prompted investors to reconsider their positions in consumer-focused businesses, particularly in sectors such as automotive, travel, home improvement, and restaurants.
For instance, Jim Simon’s quant-focused Renaissance Technologies liquidated the majority of its American Airlines (AAL) shares, retaining only a fraction of its previous holdings.
Bill Ackman’s Pershing Square reduced its position in Lowe’s (LOW) by over 80%, leaving the hedge fund with 1.25 million shares in the home improvement company. Additionally, Ackman scaled back his stake in Chipotle Mexican Grill (CMG) by approximately 13%.
According to Bloomberg analysis, Nike (NKE) and Ford (F) were notable among the companies experiencing significant divestment, with large quantities of shares being sold off.
Hopeful Signs in Home Building: Optimism Emerges Amidst Sector Challenges
There are indications that investors are perceiving a more favorable outlook for the home building market, fueled by optimism that interest rates will decrease once the Federal Reserve initiates rate cuts. While Fed officials have been discussing the potential for rate cuts in recent months, they have emphasized the importance of clear evidence indicating controlled inflation before implementing such measures.
Reflecting this sentiment, Pershing Square increased its investment in real estate development and management company Howard Hughes (HHH) by approximately 2 million shares. Additionally, David Tepper’s Appaloosa entered positions in home building products company Masco Corp. (MAS), flooring manufacturer Mohawk Industries Inc. (MHK), and insulation and glass company Owens Corning (OC).
However, Berkshire Hathaway opted to exit its holding of 5.9 million shares in residential construction company D.R. Horton (DHI), suggesting a divergence in outlook among investors regarding specific players in the home building sector.
Nvidia’s Debut 13F Filing: Insights into the Tech Giant’s Investment Strategy
Nvidia, now the third-largest U.S. company by market value, made headlines last week with its first-ever 13F filing, revealing investments in five publicly traded companies.
Among these holdings, semiconductor designer Arm Holdings stood out as Nvidia’s largest investment in terms of dollar value at the end of the fourth quarter.
Arm Holdings, which went public in September in the largest U.S. initial public offering since 2021, saw Nvidia holding 1.96 million shares valued at $147.3 million by the quarter’s close.
In addition to Arm Holdings, Nvidia reported stakes in Soundhound AI (SOUN), Nano-X imaging (NNOX), Recursion Pharmaceuticals (RXRX), and over-the-counter-traded Tusimple Holdings. Following the disclosure, the stock prices of these companies experienced notable increases. Particularly, Nvidia’s investment in Recursion Pharmaceuticals emerged as its second-largest holding, valued at nearly $76 million.