Any list of the greatest hedge fund managers of all time should include Ken Griffin. He founded Citadel Advisors in 1990. Today, Citadel ranks among the largest and most successful hedge funds in the U.S. And Griffin is worth around $46.7 billion, making him the 31st wealthiest person in the world.
Unsurprisingly, the stocks Griffin buys and sells attract the interest of many investors. Citadel recently submitted its quarterly 13F filing to the U.S. Securities and Exchange Commission. We now know that Griffin is loading up on Nvidia (NVDA -0.76%) and Tesla (TSLA -1.15%) stocks. Are these smart picks for other investors, too?
In the third quarter of 2024, Griffin bought 4.7 million additional shares of Nvidia. This increased Citadel's stake in the chipmaker by a whopping 194%. Nvidia was the hedge fund's third-largest holding at the end of Q3.
Interestingly, the purchase of Nvidia in Q3 reversed the trend seen in recent quarters. Griffin sold 24.6 million shares of the company in Q1 and another 9.28 million shares in Q2.
Griffin also aggressively bought Tesla stock in the last quarter. His purchase of around 1.17 million shares boosted Citadel's stake in the electric vehicle (EV) leader by nearly 5x.
The billionaire hedge fund manager first initiated a position in Tesla in the second quarter of 2013. He eventually exited the stock in Q4 of 2015 only to buy it again in the next quarter. Griffin sold all of Citadel's shares of Tesla a second time in Q1 of 2020 but bought shares in Q2. He has held onto the stock ever since, adding shares at times and reducing his stake at other times.
Griffin hasn't commented publicly about his recent purchases of Nvidia and Tesla to my knowledge. However, we can make some pretty good guesses as to why he bought both stocks in Q3.
Nvidia remains the dominant player in the artificial intelligence (AI) chip market. The demand for AI chips continues to soar, driven largely by the scramble to develop generative AI applications.
I suspect Griffin jumped on the opportunity to buy on the dip with Nvidia in Q3. The stock briefly pulled back as much as much as 27% during the quarter on reports that its new Blackwell GPUs could be delayed.
Tesla also sold off during part of Q3. In early August, the EV stock fell to roughly 27% below its previous peak. Although we don't know exactly when Griffin bought Tesla shares for Citadel's portfolio, I wouldn't be surprised if he pulled the trigger when the stock was down significantly.
Should other investors buy Nvidia and Tesla stocks solely because Griffin did? Absolutely not. Your investment goals and risk tolerance could be very different from those of a multibillion-dollar hedge fund manager. Also, neither Nvidia nor Tesla are trading at the discounts they were during stretches in Q3. That said, the long-term outlook for both stocks looks promising.
Even with some hiccups along the way, Nvidia's Blackwell GPUs could become a new gold standard for handling AI workloads. The company expects to launch even more powerful chips later next year.
Nvidia CEO Jensen Huang thinks the shift from general-purpose computing to accelerated computing presents a $1 trillion opportunity. He believes we're in the early stages of this transition. Unsurprisingly, Huang intends for Nvidia to be the biggest winner in accelerated computing.
Tesla could benefit tremendously if the Trump administration establishes a federal framework that relaxes regulations related to self-driving cars. The company recently unveiled its robotaxi vehicle and plans to jump into the autonomous ride-hailing market next year.
Between the two stocks, I think Nvidia is the better pick right now. However, both Nvidia and Tesla could deliver exceptional long-term returns over the next decade and beyond.