Bridgewater’s Trading Moves: Dalio Cuts Nvidia While Boosting Broadcom and Super Micro
Investors on Wall Street often face a flood of information during earnings season and daily economic reports. Among these releases, some can reveal significant insights that may go unnoticed.
A critical deadline for institutional investors occurred on November 14, when those managing at least $100 million in assets under management (AUM) were required to submit Form 13F to the Securities and Exchange Commission. This form highlights the recent trading activities of Wall Street’s leading asset managers, showing the stocks they bought and sold in the previous quarter, which ended on September 30.
While many investors track Warren Buffett’s moves at Berkshire Hathaway, he is not the only billionaire investor making waves. Ray Dalio, the billionaire manager at Bridgewater Associates, had noteworthy trading activity as well. He runs a well-diversified fund with nearly $17.7 billion in AUM, and his latest trades have attracted attention.
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Dalio Reduces Nvidia Holdings by 27%
Dalio made headlines by significantly selling his shares of Nvidia (NASDAQ: NVDA), the leading player in the AI sector. Following a historic 10-for-1 stock split that occurred on June 7, Nvidia has been at the forefront of the AI revolution with its powerful GPUs.
Despite Nvidia’s strong presence, Bridgewater sold 1,801,922 Nvidia shares in the third quarter, marking a 27% decrease from its position on June 30. This divestment could suggest profit-taking, but there may be deeper reasons at play.
The surge in Nvidia’s stock price has raised concerns about a potential bubble, as history shows that revolutionary technologies often face inflated expectations that can lead to market corrections. Moreover, regulatory challenges, particularly restrictions on exports of advanced AI chips to China, have also impacted Nvidia’s growth prospects. China is a key market for Nvidia, and ongoing competition from both external companies and customers developing their own AI chips could threaten its market position.
Image source: Getty Images.
Bridgewater Boosts Stake in Broadcom
In contrast, while reducing Nvidia holdings, Dalio’s firm significantly increased its investment in Broadcom (NASDAQ: AVGO). During the quarter, Bridgewater purchased 710,793 shares, boosting its position by an impressive 291% following Broadcom’s first-ever stock split on July 12.
Broadcom, known for its AI networking solutions, has become a preferred choice among businesses. Its Jericho3-AI fabric product facilitates connections for up to 32,000 GPUs, which improves performance in data centers where quick decisions are crucial. Unlike Nvidia, Broadcom has a diverse business structure, with significant revenue coming from various segments beyond AI. This diversification may help it better weather any potential downturns in the AI market.
Super Micro Computer Sees a Major Investment Boost
Additionally, Dalio’s fund expanded its position in Super Micro Computer (NASDAQ: SMCI), adding 1,453,270 shares and increasing its stake by an astounding 921%. This growth came after Super Micro’s first 10-for-1 stock split closed on September 30.
Super Micro has capitalized on the rising demand for customizable rack servers as businesses invest in their data infrastructures for competitive advantages. The company’s solutions have become essential for companies looking to enhance their data center capabilities.
Super Micro’s Growth Faces Scrutiny as Accounting Issues Arise
Super Micro Computer has seen impressive sales growth, mostly due to its integration of Nvidia’s top-tier GPU technology into its rack servers. This key partnership is a major factor in the company more than doubling its revenue in fiscal 2024, which ended on June 30.
Concerns Over Allegations and Auditor Resignation
However, potential investors should proceed with caution. In late August, Hindenburg Research, a well-known short-seller, produced a report claiming “accounting manipulation” at Super Micro. This raised serious concerns, leading the Department of Justice to start an early-stage investigation into the company’s accounting practices, as reported by The Wall Street Journal.
Compounding issues, Ernst & Young, the firm’s auditor, resigned in late October after previously highlighting concerns related to internal controls at Super Micro. While these resignations do not definitively confirm any allegations, they cast a shadow over the company’s integrity.
Pending Financial Reporting Raises Red Flags
Despite its apparent strengths in the market, Super Micro Computer’s stock remains a risky proposition until it files its delayed annual report, clarifying the various accounting questions surrounding it.
Are Other Investments More Promising?
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Sean Williams has no holdings in any of the mentioned stocks. The Motley Fool has stakes in and recommends Berkshire Hathaway and Nvidia, and they also recommend Broadcom. Please see their disclosure policy for details.
The views and opinions expressed herein belong to the author and do not necessarily reflect those of Nasdaq, Inc.
