The investment community eagerly awaits a particular filing every quarter — and it’s one that offers us a view into the latest moves of the world’s top investors. This particular moment happened a few weeks ago when institutional investors managing at least $100 million filed their 13F forms with the Securities and Exchange Commission (SEC). These forms show the latest buys and sells of these expert investors along with information on their current holdings.
Why are the rest of us so eager to see the latest 13F filings? They may offer us inspiration for our own portfolios as we search for investing ideas. Of course, these billionaires, like the rest of us, don’t score a win with every stock pick. But they do have significant track records of success, so it’s worth studying their moves — and in some cases following them.
In the most recent quarter, billionaire Ole Andreas Halvorsen took a big step in the hot area of artificial intelligence (AI), selling all of his Broadcom (AVGO 6.63%) shares and piling into this year’s top Dow Jones Industrial average performer. Let’s dive in and consider if it could be the right move for you.
Image source: Getty Images.
From Tiger Cub to Viking
First, a quick look at this top investor. At the helm of Viking Global Investors, Halvorsen helps manage more than $27 billion in securities falling under 13F reporting requirements. He is known as a “tiger cub,” having spent the earlier days of his career working at Julian Robertson’s Tiger Management, one of the first hedge funds, before launching Viking back in 1999.
In the third quarter, Halvorsen and his team made 23 new purchases and added to 21 current positions, but they also sold out of 22 stocks and reduced holdings of 26. So, they favored selling, but not by a huge degree. It’s important to keep in mind that in some cases selling is done to lock in profits and isn’t necessarily linked to a loss of faith in a particular company or the market in general.
Now, let’s consider Halvorsen’s big AI move in the third quarter. The billionaire sold his entire position in Broadcom, a company that’s seen its shares advance in recent years thanks to its key role in networking. About 99% of today’s Internet traffic passes through some sort of Broadcom technology. Halvorsen originally bought the shares in the second quarter of this year, so this wasn’t a long-term holding. Broadcom shares may have been a winning investment, though, as they rose 30% from the start of the second quarter through the end of the third quarter.
A recent Dow Jones addition
But Halvorsen and his team may have preferred the performance of another AI stock in recent times, one that’s heading for the biggest gain in the Dow Jones Industrial Average this year. I’m talking about AI star Nvidia (NVDA 3.14%), which actually joined the Dow Jones recently — just last month. Halvorsen increased his Nvidia holding in the third quarter by 63%, a signal that the billionaire thinks this top player still has room to run. Nvidia also is a newish holding for Halvorsen, as he first bought the stock in the second quarter of this year.
So, could favoring Nvidia over Broadcom be the right move for you? This depends on your investing style and strategy. Broadcom today is much cheaper than Nvidia, trading at 28 times forward earnings estimates compared with Nvidia’s 47. And Broadcom also is likely to benefit from growth in the AI market — cloud service providers are flocking to the company for AI networking and custom AI accelerators. Analysts predict that today’s $200 billion AI market should reach $1 trillion by the end of the decade. For investors looking for a bargain AI buy, Broadcom makes a great choice right now.
But investors eager to get into a high-growth AI stock still may favor Nvidia even after its 180% gain this year and even considering its valuation. The company dominates the AI chip space and thanks to its pledge to innovate, it’s likely to hang onto this leadership. On top of that, Nvidia is launching its new Blackwell architecture over the coming weeks, and this could be a major catalyst for earnings growth and share performance.
So both of these stocks make compelling AI buys today, but high-growth investors may favor following Halvorsen’s move and piling into Nvidia.
Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
Add Comment