Wealthy Individuals Swap Nvidia Shares for Less Expensive Exchange-Traded Funds
Nvidia's (NVDA 3.10%) stock has seen a significant surge in value over the past two years, making it a prominent player in the race for AI dominance. Smart hedge fund managers like Stan Druckenmiller and David Tepper recognized this potential early and made substantial investments in the semiconductor giant. However, even as billionaires have amassed significant wealth from Nvidia, they've begun to sell off their positions, partly due to the stock's impressive run.
Among those selling Nvidia shares are Druckenmiller, who sold over 80% of his position, Philippe Laffont, who trimmed his position by 68%, and David Tepper, who reduced his holdings by 44%. Yet, they're not entirely abandoning the stock, instead diversifying their portfolios and searching for the next big winners. They've found potential in undervalued exchange-traded funds (ETFs) like the iShares Russell 2000 ETF (IWM 0.43%).
Druckenmiller, in particular, is heavily invested in the ETF, with it now making up 15% of his portfolio. Meanwhile, Englander added substantial calls and shares of the ETF, leaning more bullish on small caps. The appeal of small caps lies in their relatively cheaper valuations compared to large-cap stocks, which have fully recovered from the 2022 bear market.
Tepper and Laffont, however, are looking beyond U.S. markets, setting their sights on Chinese stocks. They've both invested in the iShares China Large-Cap ETF (FXI 1.94%). Despite the challenges China faces, such as slow economic growth and political tensions, its stocks remain undervalued. With stimulus measures in place and the easing of pandemic restrictions, there's potential for a significant rebound.
In conclusion, while billionaires like Druckenmiller, Laffont, Tepper, and Englander have shown interest in Nvidia and small-cap ETFs, they're also diversifying their portfolios and exploring investment opportunities in emerging markets, such as China. The ongoing trend seems to favor a multi-strategy approach that balances risk, growth, and diversification.
Even with their sale of Nvidia shares, these billionaires continue to manage their finance thoroughly, seeking new investing opportunities. For instance, Druckenmiller has extensively invested in undervalued small-cap exchange-traded funds (ETFs) like the iShares Russell 2000 ETF, recognizing their relatively cheaper valuations compared to large-cap stocks.
