Nvidia stock continues to soar this year, rising more than 80%. However, one of the company’s largest shareholders revealed the reason for selling his shares. Nvidia’s 15th largest shareholder, Jennison Associates, was an early investor in the chipmaker and currently owns a 0.57% stake in the company, worth $7 billion. This is down from a peak of 0.95% in the final quarter of 2022, according to LSEG data. Jenison Associates Managing Director Raj Shanth told CNBC Pro that the investment firm is selling its position in the AI chip maker to manage risk, even though it remains optimistic about the long-term outlook. He said he is doing so. “We value risk management more than many growth investors,” Shant told CNBC Pro. He said that as the stock price rose 238% in 2023, Nvidia quickly rose to nearly 10% of Jennison Associates’ Global Equity Opportunities Strategy and would need to sell shares to bring its allocation back to about 6%. I explained that there was. “In fact, we are as optimistic as ever, [also] When should investors sell growth stocks? When asked about the right time to sell a growth company like Nvidia, Mr. Shant said that the company’s latest report entitled “Buy and Hold Forever?” I pointed out the research notes. He explains that investment firms sell positions either to buy shares in more attractive growth stocks, to lock in profits, or because fundamentals change. Shant emphasized that as a long-term investor, short-term volatility should not trigger a sell signal for Jenison. The semiconductor giant’s stock price briefly entered correction territory after falling 10% from its all-time high last week. Rather, the former fund manager said fundamentals such as a lack of growth were a bigger factor in Mr Jennison’s abandonment of the stock, warning that it was likely behind his disappointment in performance. The disappointment itself is more important when evaluating the future of an investment. “When you look at disappointment, you have to look at whether it’s demand or supply. [As in] “The reality is we’re not going to have the earnings that we’d expect in that quarter,” Shant told CNBC’s Squawk Box on Friday. “One is very negative for the medium-term investment thesis, but the other is generally temporary and transitory and can usually be fixed in a good way,” said Shant, who is building a whole new industry in generative AI. He gave examples of companies like Nvidia that could lay the groundwork, and obesity drug companies like Novo Nordisk, where Jennison Associates also has a position. With various companies growing rapidly and disrupting entire industries, there is a risk that orders will decline or start to decline in any given quarter, “but in reality, they are not producing enough volumes to meet demand.” There’s a good chance we won’t be able to produce it,” Shant said. “We’re going to have a quarter where it doesn’t perform as well as analysts expect.” Asked if he would buy Nvidia stock right now, Shant said he thinks long-term investors should pass up the rally. . , Shant declined to provide investment advice, but expressed confidence in the company’s medium-term prospects. “If you have the desire and ability to close your eyes and not worry about the week to week or month to month for the next year or two? Yes. Will you outperform the market? Yes.” . Jenison Associates’ Global Equity Opportunities strategy, which holds about 35 stocks, significantly outperformed the MSCI AC World Index in 2023, returning 41.6% compared to the index’s 22.2%. Nvidia remains the second largest holding in this strategy, with an allocation of 6.1%. Despite Jenison Associates reducing its position, other institutional investors are buying Nvidia stock. Norges Bank, which manages the world’s largest sovereign wealth fund, invested in the company in the fourth quarter of 2023 and now owns about $15 billion worth of Nvidia shares. Other prominent investors in Nvidia include Morgan Stanley and Barclays, which also increased their stakes throughout the second half of last year and now own billions of shares worth of stock.
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