Nvidia was an ideal long-term investment. Stocks climbed 45,900% over the last 20 years as the company evolved from a computer graphics pioneer to an accelerated computing powerhouse. But the stock has been particularly hot lately. Stocks have more than tripled in the past 12 months as investors turned their attention to the artificial intelligence gold rush. But these gains have raised concerns about Nvidia’s valuation.
Specifically, while some Wall Street analysts still see upside potential, others expect stocks to decline over the next year. The four hedge fund billionaires listed below overcame this situation by selling some Nvidia shares in the fourth quarter, while simultaneously purchasing shares of the group. Invesco QQQ Trust (NASDAQ:QQQ)an index fund that tracks the Nasdaq-100.
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John Overdeck and David Siegel of Two Sigma Investments sold 30,663 shares of Nvidia stock in the fourth quarter, reducing their stake by 5%. At the same time, they increased their position in Invesco QQQ Trust by 75%, so that the index fund now holds the second largest position in their portfolio.
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Israel Englander of Millennium Management sold 1.7 million shares of Nvidia during the fourth quarter, reducing his stake by 45%. At the same time, he increased his position in Invesco QQQ Trust by 53%, although it is a relatively small stake.
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Bamco’s Ron Baron sold 59,942 shares of Nvidia stock in the fourth quarter, reducing his stake by 10%. He also started a small position in Invesco QQQ Trust.
What makes these deals interesting is that Nvidia holds the third-largest position in Invesco QQQ Trust. In other words, the four fund managers mentioned above have exchanged part of their direct stake in Nvidia for a more diluted form of ownership, which also provides exposure to other technology stocks.
Regardless, the Invesco QQQ Trust has returned 1,260% over the past two decades, more than double the performance of S&P500 (INDEXSNP: ^GSPC). Here’s what investors should know about this supercharged index fund.
The Invesco QQQ Trust provides exposure to technology stocks expected to benefit from artificial intelligence
The Invesco QQQ Trust measures the performance of Nasdaq-100, an index that tracks the 100 largest companies listed on the Nasdaq Stock Exchange. The Invesco QQQ Trust allocates its capital across 10 of 11 equity sectors – the financial sector is the only exclusion – but its composition is more heavily weighted towards the information technology (58.9%) and consumer discretionary sectors (17.9%).
The 10 largest holdings in Invesco QQQ Trust are listed below, by weighting.
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Microsoft: 8.7%
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Apple: 7.7%
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Nvidia: 6.1%
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Alphabet: 5.3%
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Amazon: 5.3%
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Broadcom: 4.5%
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Metaplatforms: 4.5%
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Costco wholesale: 2.4%
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You’re here : 2.4%
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Advanced micro-systems: 1.9%
While many investors view Nvidia as the preeminent artificial intelligence (AI) stock, almost all of the companies listed above are well-positioned to monetize AI.
For example, Microsoft, Alphabet and Amazon are the three largest cloud…
