Between a steady stream of economic data releases and thousands of companies lifting the hood on their operating results every three months, it can be easy for investors to miss an important announcement. Last month, one of the most-critical announcements of the quarter likely went under the radar for some investors.
On Aug. 14, institutional investors with at least $100 million in assets under management were required to file Form 13F with the Securities and Exchange Commission. A 13F gives investors a concise snapshot of which stocks Wall Street's brightest investment minds purchased and sold in the latest quarter.
Image source: Getty Images.
Even though this information can be up to 45 days old when filed, 13Fs still offer valuable clues about which stocks, industries, sectors, and trends are piquing the interest of top money managers -- including billionaire investors.
Perhaps the biggest surprise of the June-ended quarter is that, while artificial intelligence (AI) is still a popular trend, billionaires weren't shy about parting ways with shares of Nvidia (NASDAQ: NVDA) . But while Nvidia was shown to the door, 13Fs make clear that billionaire investors were seemingly infatuated with two other hypergrowth stocks.
Seven billionaire money managers were sellers of Nvidia stock
The June-ended quarter marked the third consecutive quarter that at least seven prominent billionaire asset managers were sellers of Nvidia stock. The latest round of sellers included (total shares sold in parenthesis):
- Ken Griffin of Citadel Advisors (9,282,018 shares)
- David Tepper of Appaloosa (3,730,000 shares)
- Stanley Druckenmiller of Duquesne Family Office (1,545,370 shares)
- Cliff Asness of AQR Capital Management (1,360,215 shares)
- Israel Englander of Millennium Management (676,242 shares)
- Steven Cohen of Point72 Asset Management (409,042 shares)
- Philippe Laffont of Coatue Management (96,963 shares)
Considering that Nvidia's shares have gained 603% since 2023 began, through the closing bell on Sept. 6, profit-taking is a valid reason that likely explains some of this selling activity. But there's more to this story than just billionaires cashing in their chips for tax or diversification purposes.
To start with, investor expectations for the AI revolution are probably too lofty . For 30 years, every highly touted innovation and technology has endured a bubble-bursting event early in its existence. This has been a reflection of investors consistently overestimating the uptake of new technologies/innovations by consumers and businesses. Since most companies lack a clearly defined plan for how they'll monetize AI, it's looking likely that artificial intelligence is simply the next in a long line of hyped bubbles.
Rapidly growing external and internal competition represents another reason for billionaire investors to fade Nvidia.
Despite Nvidia's AI-graphics processing units (GPUs) having clear computing advantages over external competitors, the company's extensive chip backlog, coupled with the considerably cheaper price point for non-Nvidia AI-GPUs, is liable to coerce at least some businesses to turn to its competitors.
What's more, Nvidia's four-largest customers by net sales, which are all members of the "Magnificent Seven," are internally developing AI-GPUs that'll be used in their data centers. The writing is on the wall that Nvidia's chips are going to miss out on valuable data center real estate moving forward.
But while billionaire money managers were busy dumping shares of Nvidia in the second quarter, they were actively piling into the following two supercharged growth stocks.
Image source: Amazon.
Amazon
The first high-octane growth stock that billionaire investors were drawn to in the June-ended quarter is e-commerce leader Amazon (NASDAQ: AMZN) . Form 13F filings show that five top-tier billionaire investors were buyers, including (total shares purchased in parenthesis):
- Ole Andreas Halvorsen of Viking Global Investors (2,391,262 shares)
- Ray Dalio of Bridgewater Associates (1,597,676 shares)
- Ken Fisher of Fisher Asset Management (1,214,055 shares)
- Ken Griffin of Citadel Advisors (1,114,948 shares)
- Philippe Laffont of Coatue Management (702,235 shares)
Although most people are familiar with Amazon because of its world-leading online marketplace, this operating segment isn't why these five billionaires purchased shares of Amazon during the second quarter.
The primary lure for Amazon as an investment is its globally leading cloud infrastructure service platform . Tech analysis firm Canalys pegged Amazon Web Services (AWS) worldwide market share at 33%, as of June 2024. AWS has a sustained double-digit growth rate, is pacing more than $105 billion in annual run-rate sales, and is consistently responsible for between 50% and 100% of Amazon's operating income.
AWS is also Amazon's vessel to take advantage of the rise of AI. The company plans to deploy generative AI solutions to help AWS clients improve their business and better reach consumers. The enterprise cloud and AI revolution are still in their early innings, which bodes exceptionally well for AWS' future.
But there's more to Amazon than just AWS and its e-commerce platform. Amazon is drawing more than 3 billion visits each month, which makes it a magnet for businesses wanting to advertise . Advertising services revenue has grown by at least 20% on a year-over-year basis for two years.
Furthermore, its growing content library and exclusive sports partnerships -- an 11-year streaming rights deal with the NBA and the streaming rights for Thursday Night Football -- should afford the company exceptional pricing power with its Prime subscription.
Nio
The second hypergrowth stock that billionaires appear to be infatuated with in lieu of Nvidia is China-based electric-vehicle (EV) manufacturer Nio (NYSE: NIO) . In spite of its diminutive nominal share price, which hovered around $5 for much of the second quarter, a half-dozen billionaires piled in, including (total shares purchased in parenthesis):
- Steven Cohen of Point72 Asset Management (4,018,659 shares)
- Israel Englander of Millennium Management (1,484,185 shares)
- Jeff Yass of Susquehanna International (626,300 shares)
- John Overdeck and David Siegel of Two Sigma Investments (395,000 shares)
- Ken Fisher of Fisher Asset Management (30,868 shares)
On one hand, we've certainly witnessed a cooling in EV demand throughout 2024. Competition has picked up in the EV arena, and consumers have been a bit leery to take the plunge given the lack of available EV charging infrastructure. But in spite of these challenges, we've witnessed meaningful sales growth and a sizable production ramp from Nio .
Since China lifted its cumbersome COVID-19 mitigation measures in December 2022, Nio has enjoyed a fairly steady production expansion. The absence of supply chain constraints has allowed the company to produce around 20,000 EVs per month. Through August, deliveries were up nearly 36% from the comparable period in 2023.
Nio also wins with its innovation . It's been introducing at least one new EV annually for years, and has taken advantage of an increase in demand since rolling out its NT 2.0 platform, which incorporates an assortment of new driver assistance features.
To add, Nio introduced its ONVO brand to the world in May. Whereas Nio has traditionally focused on premium EVs, the ONVO brand is more family oriented and will provide a potentially more palatable price point for Chinese consumers.
Lastly, the efforts of management to keep costs under control while improving margins are beginning to pay off. Vehicle margin jumped six percentage points in the June-ended quarter to 12.2% from the prior-year period, while adjusted net loss shrank close to 17%. Though Nio still has a lot of work to do to reach profitability, it's taking steps in the right direction.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Sean Williams has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy .
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