Wall Street’s Major Moves: Citadel’s Bold Shift in Investments

This month has been bustling with activity on Wall Street. With Election Day approaching, earnings reports coming out, and the latest inflation numbers being revealed, there has been no shortage of news for investors. Yet, one crucial event may have slipped under the radar: the November 14 deadline to file Form 13F with the Securities and Exchange Commission, detailing trades for the quarter that ended in September.

A Form 13F is mandatory for institutional investors that manage at least $100 million in assets, and it must be filed within 45 days after the quarter’s end. These filings give a clear picture of the stocks that top money managers on Wall Street are buying and selling.

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While many investors are keenly awaiting Warren Buffett’s latest moves at Berkshire Hathaway, he’s not the only billionaire making waves. Ken Griffin at Citadel has also attracted interest as his hedge fund remains the most profitable since its inception.

Citadel employs strategies that often hedge its stock holdings with options, but there are trades made last quarter that stand out significantly.

Citadel Cuts Nearly Its Entire Stake in Palantir

One of the hottest AI stocks right now is Palantir Technologies (NYSE: PLTR). Its shares have surged by 791% over the past two years, and its market capitalization reached $150 billion last week.

Despite these impressive gains, Ken Griffin sold 91% of Citadel’s shares in Palantir during the latest quarter. His firm also increased its options on Palantir, providing a hedge against its stock position.

It’s essential to grasp why a billionaire manager would take such an action. The argument for investing in Palantir rests on its unique offerings. The Gotham platform, used by governments for mission planning and data analysis, and the Foundry platform, which helps businesses interpret data, set Palantir apart from its competitors. These factors contribute to reliable cash flow for the company.

However, the valuation of Palantir might explain why Griffin opted to sell. As of November 22, the company’s stock was valued at over 42 times Wall Street’s projected sales for 2025 and 137 times estimated earnings per share, levels often deemed unsustainable.

Furthermore, Gotham’s use is restricted to the U.S. government and allies, which limits long-term profit opportunities for Palantir. While Foundry continues to grow, it hasn’t yet matched Gotham’s proven track record.

Therefore, Palantir’s rapid share price increase may not hold for long.

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Griffin Embraces Nvidia: A Shift in AI Strategy

In a notable contrast, Griffin’s team made a significant investment in Nvidia (NASDAQ: NVDA) after previously selling shares. During the quarter ending in September, Citadel boosted its Nvidia holdings by 194%, despite having sold off stock during the previous quarter when Nvidia completed a historic 10-for-1 stock split. At the same time, Citadel reduced its options on Nvidia, indicating ongoing hedging strategies.

The surge in investment is linked to Nvidia’s strong hold in AI-enhanced data centers. According to TechInsights, Nvidia’s graphics processing units (GPUs) accounted for about 98% of shipments to data centers over the past two years, with numerous backlogged orders for the H100 GPU and Blackwell GPU.

Nvidia benefits from strong pricing power and gross margins due to excess demand. The company has reportedly been earning $30,000 to $40,000 for its Hopper chip, significantly higher than competitors like Advanced Micro Devices‘ MI300X AI-GPU.

Nevertheless, some risks are emerging for Nvidia, as competitors are beginning to pose challenges that could affect its profitability. Many of Nvidia’s largest clients are developing their own AI-GPUs, which could affect Nvidia’s market dominance.