Hedge funds took profits in these popular technology stocks during the fourth quarter
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Hedge funds appeared to take profits in a host of winning ” Magnificent Seven ” stocks during the fourth quarter at the end of a blowout year for the septet. Firms from Appaloosa Management to D1 Capital reduced or vacated positions in many popular 2023 stocks, locking in profits ahead of the new calendar year, recent securities filings show. The moves came after a stellar year for the sector in the wake of a crushing 2022. The S & P 500 Information Technology Index surged 49% in the past 12 months, boosted by optimism surrounding the introduction of artificial intelligence and the contribution it’s expected to make to profits. Take a look at how Wall Street played the tech group in the final months of last year. Profit-taking in AI darling Nvidia Chipmaker Nvidia dominated investor enthusiasm in 2023, rallying 239% as market participants bet on its advanced AI processors. That share price appreciation inspired some investors to take profits before year-end. D1 Capital’s Dan Sundheim zeroed out his more than $60 million position in the semiconductor stock during the fourth quarter, while billionaire investor Stanley Druckenmiller shrunk his position by nearly 30%. David Tepper’s Appaloosa Management trimmed its stake by about 23%, while Phillippe Laffont’s Coatue Management and Tiger Global’s Chase Coleman sold about 5% and 13% of their respective Nvidia positions. Still, Nvidia shares rallied 14% in the fourth quarter, extending a 3% gain in the September quarter. The Jensen Huang-led chipmaker locked in the majority of its profits in last year’s first half, but is already up 47% year to date. Nor was Nvidia the only semiconductor maker that hedge funds cut back on in the fourth quarter. Along with Nvidia, Tepper reduced stakes in Advanced Micro Devices , Intel and Qualcomm , while halving his position in Taiwan Semiconductor . Coatue slashed its holding in TSM, a semiconductor manufacturer and foundry by 87%, while Viking Global’s Ole Andreas Halvorsen liquidated an entire stake in chip designer Arm Holdings , which went public in September. The VanEck Semiconductor ETF surged about 21% in the fourth quarter as the sector capped off its best year since 2009. Reducing exposure to the rest of Magnificent Seven Hedge funds also took profits in a handful of other popular Magnificent Seven stocks that helped power 2023’s AI-fueled market rally. Google- and YouTube parent Alphabet was one. During the fourth quarter, shares rose about 7%, capping off a year when it climbed a total of 58%. The company spent the latter part of the year battling it out with Microsoft for the top chatbot and overcoming the perception that it had fallen behind in the AI race. Duquesne Family Office’s Druckenmiller ditched a nearly $113-million stake in Alphabet and a roughly $19 million Amazon position, while Baupost Group’s Seth Klarman reduced his Alphabet position by nearly a quarter. Coatue’s Laffont slashed his stake in Alphabet Class A and Class C shares by 64% and 74%, respectively. Third Point’s Dan Loeb also dumped an Alphabet position worth about $120 million , while paring back stakes in Amazon and Microsoft by about 10% ad 9%, respectively. The latter two, however, remained among Third Point’s top three holdings at the end of the quarter, totaling more than $600 million each. D1’s Sundheim reduced stakes in Microsoft and Meta Platforms by more than 62% and 26%, respectively, while Coatue cut about 9% of its Meta stake. D1 Capital’s Microsoft sale brought the fund’s stake to less than $242 million. The moves in Meta came in a quarter in which the Instagram owner surged 18%. The stock is already up 33% in 2024 after jumping 194% in 2023, with investors rewarding the social media provider’s focus on efficiency. Viking Global sold its entire roughly $1 billion Microsoft stake and slashed its Amazon position by 44%, while Berkshire Hathaway trimmed its Apple stake. Corvex Management liquidated its position in the iPhone maker. Beyond the most prominent companies, hedge funds also made key reductions in other popular technology and semiconductor bets last quarter. Starboard Value’s Jeffrey Smith , for example, reduced its stake in Salesforce by 11% after taking an activist stake in the software company in 2022, while Sundheim’s D1 Capital sold out its entire position. Shares of Marc Benioff -led Salesforce have risen 10% this year after nearly doubling in 2023. Appaloosa’s Tepper also reduced its stakes in Uber and Chinese technology giants Pinduoduo and Baidu , while liquidating entire stakes in Arista Networks and JD.com . Fresh bets on technology To be sure, a handful of hedge funds opened or raised their bets on some technology stocks even as they pulled back or exited positions in others. Alphabet was a new bet for a handful of hedge fund leaders, including Viking Global and Scion Asset Management ‘s Michael Burry. Burry, known for calling the subprime mortgage crisis, also opened a $4 million position in Amazon totaling more than $4 million, and a stake in Oracle . He also beefed up existing positions in China-based technology providers Alibaba and JD.com. D1 Capital’s Sundheim also hiked positions in Amazon and Alphabet, while Druckenmiller amped up his Microsoft holding by 7%. Tepper increased the size of his positions in Microsoft and Amazon and established a new one in Oracle. Third Point’s Loeb increased his bet on Meta Platforms, even as Tiger Global and Viking Global trimmed their positions. Elsewhere, Coatue opened fresh stakes in Salesforce, Apple and ServiceNow , while lifting his Netflix position by 14%. Away from Nvidia, Taiwan Semi and Arm, other semiconductor companies attracted new attention. Viking Global opened a fresh position in Advanced Micro Devices , and Coatue’s Laffont expanded his holding in the chipmaker a hair and revealed a new bet on Intel. For his part, Tiger Global’s Coleman lifted his holding in Taiwan Semiconductor by 48%, or about $94 million, while unveiling a more than $203 million position in Broadcom . — CNBC’s Alex Harring and Yun Li contributed reporting
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