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Billionaire DE Shaw Dumped Nvidia and Bought These 2 Stocks Instead
While using computers and algorithms is commonplace on Wall Street today, David Shaw was an early pioneer who became known as the “King of Quants” for using them to master high-speed quantitative trading. Shaw grew his DE Shaw hedge fund from $28 million in initial investment capital in 1988 to over $90 billion today. While […] The post Billionaire DE Shaw Dumped Nvidia and Bought These 2 Stocks Instead appeared first on 24/7 Wall St..
While using computers and algorithms is commonplace on Wall Street today, David Shaw was an early pioneer who became known as the “King of Quants” for using them to master high-speed quantitative trading.
Shaw grew his DE Shaw hedge fund from $28 million in initial investment capital in 1988 to over $90 billion today. While he has garnered 12.7% annual returns since inception, his flagship Composite Fund returned 18% in 2024 while the macro-focused Oculus Fund roared 36% higher.
D.E. Shaw is a hedge fund known for using computer models and algorithms to find attractive investment candidates. Its founder David Shaw has been called the “King of Quants.”
The billionaire investor dumped 40% of the holdings it had in Nvidia (NVDA) stock and put it to work in a number of other companies.
Two stocks Shaw bought in particular were Boeing (BA) and Tesla (TSLA), multi-million-share purchases that value his stakes at over $1 billion.
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Although the billionaire investor continues to hold a sizable stake in Nvidia (NASDAQ:NVDA) worth some $1.4 billion, he shed some 40% of his holdings in the fourth quarter and has been steadily selling off his position.
Shaw, who owned about 37.6 million shares of the AI chipmaker at the end of 2023, finished last year with just 10.2 million shares. Nvidia is still a large holding for the hedge fund operator — it is his fourth-largest and accounts for 1.5% of the total — but Shaw was rapidly deploying his money into other stocks and exchange-traded funds, many of which he already owns a big stake in.
Below are two multi-million-share purchases Shaw made in the fourth quarter, significant investments in stocks that boosted one to a top-10 portfolio holding from a previously inconsequential position.
Boeing (BA)
Trouble aircraft manufacturer Boeing (NYSE:BA) was the big purchase Shaw made last quarter (though not the biggest). The hedge fund bought more than 5.4 million shares of BA stock of around $165 per share.
With shares trading north of $176 each today, Shaw is up about 5.6% already. He now owns 5.69 million shares worth $1.01 billion. Boeing is just one of six billion-dollar investments in his portfolio that owns nearly 3,000 stocks. BA stock is his sixth largest position and accounts for 1.1% of the portfolio’s total.
It’s a big vote of confidence in the aircraft manufacturer, which has suffered substantial loss of credibility due to numerous and ongoing issues with its 737 MAX, along with problems at its Spirit AeroSystems (NYSE:SPR) supplier. Boeing is buying Spirit for $4.7 billion to bring it in-house and resolve its quality control issues. The deal is expected to close in mid-2025.
The aircraft manufacturer is trying to make a u-turn as it cedes market share to rival Airbus (OTC:EADSY). And though it has made some progress on the commercial side, its defense business continues to lose money.
The plane maker can’t say its issues are behind it, and it still faces turbulence going forward. Although BA stock is up 30% from its lows, investors can expect extreme volatility as shares depressurize from time to time. Buckle up! It’s going to be a bumpy ride.
Tesla (TSLA)
Shaw might not have spent as much on Tesla (NASDAQ:TSLA) stock as he did on Boeing, but the billionaire bought over 2 million shares of the electric vehicle company. Already his fifth largest position, just behind Nvidia, Shaw now owns 3.2 million shares worth $1.3 billion.
As he was buying at $333 per share, his latest tranche is down about 10%, though his average price since he started buying TSLA stock is just $288 per share, giving Shaw an overall 4% gain.
Despite being the biggest U.S. EV maker and one of the largest in the world, it means the slowdown in EV demand is going to hit Tesla hard. Especially in Europe, sales fell 50% in the EU in January even as battery electric vehicles made up 15% of the auto market’s new registrations, up from 10.9% a year ago.
Last year was the first time Tesla saw sales drop from one year to the next. After TSLA stock gained following the presidential election, rising from around $250 per share to over $488 per share, the EV maker has given back 40% of its gains.
The stock remains richly valued at 77 times earnings estimates and 10 times sales while also trading at 270x the free cash flow it produces.
As an industry leader, Tesla deserves a premium, but this might not be the time to be buying its stock.
The post Billionaire DE Shaw Dumped Nvidia and Bought These 2 Stocks Instead appeared first on 24/7 Wall St..
