Citadel and DE Shaw cut Nvidia holdings ahead of market dip

Hedge funds Citadel and DE Shaw significantly reduced their holdings in Nvidia, while Renaissance Technologies and Marshall Wace increased their positions, ahead of the recent stock market downturn, according to a report by the Financial Times.

The report cites US regulatory filings as showing that Citadel, the most successful hedge fund in history, sold approximately 500,000 Nvidia shares in the second quarter, reducing its holding to $19m by the end of June, down from $60m at the end of March. DE Shaw also more than halved its Nvidia stake, cutting it to $1.4bn by the end of June.

In a more extreme move, Paul Singer's Elliott Management, which had recently cautioned that Nvidia was in a "bubble" and that the hype around AI was "overblown," completely exited its position, selling all 50,000 of its shares.

Conversely, Renaissance Technologies, the quantitative firm founded by billionaire Jim Simons, acquired 1.5m Nvidia shares, increasing its total to 7m shares valued at $867m by the end of June. Similarly, London-based Marshall Wace bought around 3.7m shares, bringing its holding to $1.5bn.

Investor enthusiasm had driven Nvidia's stock up by 150% in the first half of this year, following a tripling of its value the previous year due to surging demand for its advanced semiconductors, which are crucial for building artificial intelligence systems.

However, during a market rout earlier this month, Nvidia lost approximately $400bn in value within minutes as investors grew anxious about the global economic outlook. The stock has since recovered some of the losses.

An analysis of SEC filings by the Financial Times, which looked at 23 major hedge funds managing a total of $1.4tn in US equities, revealed that, on average, these funds reduced their Nvidia holdings by about 6%.

Meanwhile, Man Group and Two Sigma collectively acquired an additional 600,000 Nvidia shares by the end of June.

Among other members of the so-called "Magnificent Seven" tech stocks, funds generally increased their positions in Apple and Microsoft while reducing their stakes in Alphabet, Amazon, Meta and Tesla.