Friday, 18 October 2024
by BD Banks
You can bet he knows how to spell Nvidia (NVDA) now.
By his own admission, the billionaire investor Stanley Druckenmiller was somewhat in the dark about the AI-chip colossus when he first bought Nvidia shares in fourth-quarter 2022 at the urging of his partner.
Related: Nvidia stock hits record high as key AI player smashes Q3 earnings
“I didn’t even know how to spell it,” the chairman and CEO of the wealth-management firm Duquesne Family Office told CNBC.
The spelling is a little tricky and the name — suggested by Co-Founder, President and CEO Jensen Huang — comes from the Latin word “invidia,” meaning “to look against in a hostile manner,” or what some folks call the evil eye.
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Invidia is also the Roman goddess of revenge and her counterpart in Greek mythology is Nemesis, which might seem rather ironic in light of one of Druckenmiller’s investment choices.
“I bought it and then a month later ChatGPT happened,” he said, referring to the AI chatbot. “Even an old guy like me could figure out what that meant, so I increased the position substantially.”
Make no mistake, this man has hit the bullseye many times in his long career.
Druckenmiller managed money for the investor and philanthropist George Soros from 1988 to 2000 as the lead portfolio manager for Quantum Fund. There, he learned “that when you have tremendous conviction on a trade, you have to go for the jugular.”
Their most celebrated play was a bet against the British pound in 1992, where commentators said they “broke the Bank of England” and reportedly pulled in $1 billion in the process.
Druckenmiller is former chairman and president of Duquesne Capital, which he founded in 1981 and closed in 2010 when it had more than $12 billion in assets.
In 2011, he switched to a family office, establishing the wealth-management firm Duquesne Family Office.
Related: Nvidia’s biggest problem might be about to get even worse
So, the guy knows a thing or two about investing. But nobody makes the right decision all the time.
Decca Records declined to sign The Beatles, Napoleon thought invading Russia was a good idea, and back in 1979 Ross Perot passed on a chance to buy a little outfit called Microsoft (MSFT) . Hey, it happens.
Earlier this year, Druckenmiller said that he cut Duquesne Family Office’s position in Nvidia in late March.
“We did cut that and a lot of other positions in late March,” he said. “I just need a break. We’ve had a hell of a run. A lot of what we recognized has become recognized by the marketplace now.”
At that time, Druckenmiller said that the swift artificial intelligence boom could be overdone in the short run.
“I’m not Warren Buffett,” he said, nodding to the Berkshire Hathaway CEO. “I don’t own things for 10 or 20 years. I wish I was Warren Buffett.”
Duquesne owned about 6.18 million Nvidia shares at the start of the year, 1.76 million at the end of the first quarter and 214,000 when the second quarter closed, CNBC reported. The chipmaker was his top holding in the third quarter of last year.
At the time, he owned 8.75 million shares valued at around $400 million.
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During an Oct. 16 interview with Bloomberg, Druckenmiller was asked about his current Nvidia stake.
“I’ve made so many mistakes in my investment career,” he said. “One of them was I sold all my Nvidia (shares). … I own none. … It was a big mistake in terms of AI.”
Nvidia is up almost 3% at last check and hit a fresh high. The shares are up 182% year-to-date and the stock has tripled (up 203%) from a year ago as the AI boom goes into full swing.
Shares of NVDA closed at a record $138.07 on Oct. 14 and Nvidia is breathing down computer kingpin Apple’s (AAPL) neck to become the world’s most valuable company.
Nvidia briefly became the world’s most valuable company in June before being overtaken by Microsoft, and all three companies have been playing market-cap leapfrog for the top spot.
“I thought the valuation was rich,” Druckenmiller said. “We are … long-term believers in AI and there’s still many ways we’re playing AI, particularly the infrastructure that’s been built out to support the power needed.”
“And, yes, I think Nvidia is a wonderful company, and were the price to come down, we get involved again,” he added, “but right now I’m licking my wounds from a bad sale there.”
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