A funny thing happened right before hibh-beta tech stocks set off on a torrid, record-breaking January meltup: not only did hedge funds dump most of these beleaguered names, they also shorted them in record quantities (something which we correctly predicted would lead to the frenzied short squeeze that carried over into February), and nobody took the wrong side of that trade more than family offices for the ultra-wealthy, who as we learned in today's 13F barrage sold tech stocks during the fourth quarter right before the market rallied in 2023.
Some examples: according to Bloomberg, both Iconiq Capital and the investment firm for the Walton family’s fortune sold shares of cloud-computing company Snowflake, which has surged 20% this year after a steep slide in 2022. Stan Druckenmiller’s Duquesne Family Office also exited Microsoft in the fourth quarter, right before the tech giant gained 13% since the start of January, after falling 29% last year. Druckenmiller also exited Amazon.com after initiating the position in the third quarter; Glenview and Whale Rock also dumped the stock. AMZN fell 50% in 2022 but is up 19% so far this year.
Not everyone was selling, of course: some hedge funds, those who had been forced to liquidate their tech holdings earlier, were smart enough to dial up their bets on the sector in the fourth quarter. Lone Pine Capital boosted its Microsoft stake by 23%. The stock was also the biggest holding of Tiger Global Management (although whatever you do at home kids, don't try to replicate anything Tiger Global does). Meanwhile, like a true value investor, Seth Klarman’s Baupost Group more than tripled its Amazon stake; while Tiger Cub Lone Pine boosted its position by 44%.
That said, the iconic Druckenmiller didn't liquidate his entire tech book and made at least one smart tech bet: Nvidia, which according to Bloomberg now makes up about 4% of Duquesne’s $2 billion US equity portfolio. Nvidia, seen as a benefactor of the rise of AI, has rallied 57% this year. It remains to be seen if Nvidia - which two years ago soared when it was viewed as the benefactor of crypto mining - will also crater once the AI craze is gone and when people tire of trying to jailbrake the woke ChatGPT.
Here are some of the other findings from the latest volley of 13F reports, as compiled by Bloomberg:
More to come.