Crescat Capital, an investment management company, released its May 2023 investor letter, a copy of the same can be downloaded here. In its letter, the fund mentioned that investors may not fully grasp the magnitude of the risks posed by the US debt ceiling problems, but the primary worry lies in the potential macroeconomic repercussions that could arise from a resolution between political parties. Spare some time to check the fund’s top 5 holdings to know more about their top bets for 2023.
In its Q1 2023 investor letter, Crescat Capital mentioned NVIDIA Corporation (NASDAQ:NVDA) and explained its insights for the company. Founded in 1993, NVIDIA Corporation (NASDAQ:NVDA) is a Santa Clara, California-based multinational technology company with a $957.6 billion market capitalization. NVIDIA Corporation (NASDAQ:NVDA) delivered a 165.29% return since the beginning of the year, while its 12-month returns are up by 128.41%. The stock closed at $387.70 per share on June 09, 2023.
Here is what Crescat Capital has to say about NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2023 investor letter:
“Nvidia (NVDA): The Clear AI Winner to Everyone Now: It is very clear to us that Artificial Intelligence is in the speculative froth stage. Just like the Internet bubble in 2000, from an investment standpoint, we the think biggest threat from AI is to investors in the abundance of hyped-up overvalued technology businesses that are all perceived to be big future winners, even perhaps among the biggest past AI market share winners and perceived juggernauts. At current valuations, the tech stock leaders of the unprecedented prior 14-year cycle, who all claim AI as a key driver of their future business model, collectively have much more to lose than to gain in the ultimate reordering. Too many of these past tech winners are perceived to be big future winners once again in the emerging AI battle, which is simply not how it works. The really big future winners in AI are likely to be the much earlier-stage businesses that are highly successful in applying AI technology in totally new and disruptive ways. The truth is that the investing world at large has absolutely no clue who these companies are going to be yet.
As historical evidence to support this thesis, two of the biggest disrupters from the Internet era were Google (GOOG,GOOGL) and Facebook (META). Both these companies did not even emerge until AFTER the tech bust.
We would like to point out that Crescat featured Nvidia in its July 2014 investor letter and recommended it at a value investing conference to a group of money managers in June 2014 at a price of $4.73/share. That was the time to buy NVDA based on our model score and deep-dive fundamental analysis to get ahead of the AI craze, and we did it across our client portfolios. It led to an entire Rise of the Machines macro theme at Crescat. Nvidia went on to be the number one performing stock in the S&P 500 for each of the next three years straight. We sold it after a 5-bagger based on a deteriorating model score. In hindsight, we sold too soon. If we had held it until now, it could have been an 80-bagger. Such is the curse of the too-extreme value investor, which rest assured, we are still trying to learn from and improve on. For now, with just under a $1 trillion market cap and a P/E of 184, we believe the stock has overshot. Nvidia scores only in the 44th percentile in our overall fundamental model rank today and a low 11th percentile in our more-narrow value-rank component. We would caution strongly against buying it here.”
Photo by Christian Wiediger on Unsplash
Our calculations show that NVIDIA Corporation (NASDAQ:NVDA) ranks 10th on our list of the 30 Most Popular Stocks Among Hedge Funds. NVIDIA Corporation (NASDAQ:NVDA) was in 132 hedge fund portfolios at the end of the first quarter of 2023, compared to 106 funds in the previous quarter. NVIDIA Corporation (NASDAQ:NVDA) delivered a 68.82% return in the past 3 months.
Earlier this month, we also shared another hedge fund’s views on NVIDIA Corporation (NASDAQ:NVDA) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters Q1 2023 page.
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Disclosure: None. This article is originally published at Insider Monkey.
