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Hedge Funds Are Cashing Out Of NVIDIA Corporation (NVDA)

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  • NVDA

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 867 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30th holdings, data that is available nowhere else. Should you consider NVIDIA Corporation (NASDAQ:NVDA) for your portfolio? We'll look to this invaluable collective wisdom for the answer.

NVIDIA Corporation (NASDAQ:NVDA) shareholders have witnessed a decrease in enthusiasm from smart money recently. NVIDIA Corporation (NASDAQ:NVDA) was in 83 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic is 95. There were 86 hedge funds in our database with NVDA holdings at the end of June. Our calculations also showed that NVDA ranked 29th among the 30 most popular stocks among hedge funds (click for Q3 rankings).

Michael Gelband of ExodusPoint Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we're going to go over the fresh hedge fund action surrounding NVIDIA Corporation (NASDAQ:NVDA).

Do Hedge Funds Think NVDA Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 83 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the previous quarter. On the other hand, there were a total of 82 hedge funds with a bullish position in NVDA a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is NVDA A Good Stock To Buy?
Is NVDA A Good Stock To Buy?

Among these funds, GQG Partners held the most valuable stake in NVIDIA Corporation (NASDAQ:NVDA), which was worth $3135.4 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $3002.9 million worth of shares. Fisher Asset Management, D E Shaw, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Panview Capital allocated the biggest weight to NVIDIA Corporation (NASDAQ:NVDA), around 9.65% of its 13F portfolio. GQG Partners is also relatively very bullish on the stock, dishing out 8.58 percent of its 13F equity portfolio to NVDA.

Because NVIDIA Corporation (NASDAQ:NVDA) has faced bearish sentiment from the smart money, it's easy to see that there is a sect of funds that decided to sell off their full holdings by the end of the third quarter. At the top of the heap, Chris Rokos's Rokos Capital Management cut the largest stake of the "upper crust" of funds followed by Insider Monkey, comprising close to $89.3 million in stock, and John Hurley's Cavalry Asset Management was right behind this move, as the fund dumped about $17.6 million worth. These moves are interesting, as total hedge fund interest dropped by 3 funds by the end of the third quarter.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as NVIDIA Corporation (NASDAQ:NVDA) but similarly valued. We will take a look at JPMorgan Chase & Co. (NYSE:JPM), Visa Inc (NYSE:V), Johnson & Johnson (NYSE:JNJ), Alibaba Group Holding Limited (NYSE:BABA), Walmart Inc. (NYSE:WMT), UnitedHealth Group Inc. (NYSE:UNH), and Bank of America Corporation (NYSE:BAC). This group of stocks' market caps are closest to NVDA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JPM,101,5635067,-7 V,143,26169435,-19 JNJ,88,6871782,0 BABA,115,10201096,-31 WMT,71,7932562,0 UNH,95,11705313,-10 BAC,72,46487618,-15 Average,97.9,16428982,-11.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 97.9 hedge funds with bullish positions and the average amount invested in these stocks was $16429 million. That figure was $10050 million in NVDA's case. Visa Inc (NYSE:V) is the most popular stock in this table. On the other hand Walmart Inc. (NYSE:WMT) is the least popular one with only 71 bullish hedge fund positions. NVIDIA Corporation (NASDAQ:NVDA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NVDA is 36.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on NVDA as the stock returned 57.7% since the end of the third quarter (through 11/30) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.