Ken Griffin and David Tepper didn't build net worths of $37 billion and nearly $21 billion, respectively, by making bad decisions. However, the two billionaire investors don't always make great choices.
For example, in the first quarter of 2024, both men slashed their hedge funds' positions in Nvidia (NVDA +1.73%). In hindsight, those weren't good moves. But how much money did Griffin and Tepper leave on the table by selling Nvidia stock in Q1?
NASDAQ: NVDA
Key Data Points
Knowns and unknowns
Unfortunately, we don't have all the information we need to determine the exact amounts of foregone profits due to Griffin and Tepper selling Nvidia earlier this year. However, we can arrive at reasonable estimates.
We know that Griffin's Citadel hedge fund owned over 3.6 million shares of Nvidia at the end of 2023. By the end of Q1, the total had declined nearly 68%, to around 1.17 million shares.
Tepper's Appaloosa hedge fund owned 790,000 shares of Nvidia at the end of 2023. At the end of Q1, its stake was down 44%, to 442,000 shares.
We also know how much Nvidia stock has risen. Shares of the graphics processing unit (GPU) maker have soared roughly 135% year to date. The stock is up nearly 29% since the end of the first quarter.
What we don't know, though, is specifically when Griffin and Tepper sold their shares of Nvidia. The only information we have is that their hedge funds reduced their stakes in the chip stock during the first quarter. This major unknown prevents us from being able to calculate the exact amounts the two billionaire investors left on the table by selling Nvidia. However, we can come up with ballpark ranges.
Leaving money on the table
The highest share price for Nvidia during Q1 was $967.66 on March 25, 2024. The lowest share price for the stock was $475.95 on the first trading day of the year, Jan. 2, 2024. This means Nvidia is up roughly 150% at the time of this writing from its lowest point in Q1 and up nearly 23% from its highest point in the quarter.
Crunching the numbers reveals that Griffin's Citadel hedge fund could have made between $539.5 million and $1.75 billion by holding onto all of its Nvidia stake instead of selling. Tepper's Appaloosa hedge fund left between $76.2 million and $247.4 million in profits on the table.
We can't look at Griffin's and Tepper's sales of Nvidia in isolation, though. Both billionaires invested in other stocks in the first quarter. Did these other purchases make up for not holding onto larger positions in Nvidia? Nope.
None of the stocks Griffin's Citadel hedge fund bought in Q1 have risen anywhere close to as much as Nvidia. Tepper significantly boosted Appaloosa's stake in PDD Holdings in Q1, which did outperform Nvidia for a while afterward. However, Nvidia's recent surge, combined with a sell-off in PDD, combined to change the story. As it's turned out, Tepper would have also been better off keeping all of Appaloosa's position in Nvidia instead of selling.
A more important question
There's a more important question than the one about how much billionaire investors left on the table by selling Nvidia stock. That question is: Will you forego potential profits by either selling or not buying Nvidia now? The answer to this question is... it's impossible to know for sure.
Some think it's wise to avoid Nvidia. The company has increasing competition in the AI chip market, and tremendous growth prospects are baked into its share price. Any stumble would likely cause the stock to plunge.
However, Nvidia continues to beat all of its rivals in the marketplace. It's launching new, more powerful chips that are the best available. Nvidia has also accelerated its innovation timeline and is on what CEO Jensen Huang calls a "one-year rhythm" of new product rollouts.
Perhaps other stocks will deliver bigger gains than Nvidia over the next few years. But I won't be surprised if Nvidia continues its winning ways.
