Nvidia Stock: Hedge Funds Trim Positions, Put/Call Ratio Now Looks Bearish

NVIDIA Corp NVDA stock has been an investor darling throughout 2023. The stock gained 246% through the year. But, the latest filings revealed hedge funds trimmed their Nvidia stock exposure in the fourth quarter of 2023.

So far in 2024, the stock returned over 47% to investors, maintaining the Street’s confidence in its AI-driven rally. But, a recent revelation from the hedge fund community sparks caution.

Hedge Funds Are Trimming Their Nvidia Stakes

Hedge fund ownership of Nvidia stock trimmed from 9.13% to 9.07% from the third quarter to the fourth quarter. The number of hedge funds with Nvidia stock in their top 10 holdings also reduced from 232 to 211, marking a decline of more than 9%.

The total number of 13F filers with Nvidia stock ownership also reduced from 632 to 615.

It may appear that given the stock’s trajectory through 2023, some of the ownership shedding could be attributed to profit-taking.

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• Nvidia’s Stock Deemed ‘Frothy,’ Analyst Predicts Impending Price Decline: ‘Very, Very, Very Hard To Maintain’
• Josh Brown Says Market May Have ‘Topped’ For The Year As Nvidia Stock Has Become An Algorithm Casino ‘Freak Show’

New hedge funds positioning into Nvidia stock also reduced by 10.94%.

While 64 hedge funds added Nvidia stock for the first time to their portfolio in the third quarter, only 57 new hedge funds extended their exposure to the stock in the fourth quarter.

Nvidia Stock Put/Call Ratio Now At 1.44

Another key indicator investors must pay heed to here is the put/call ratio, a financial indicator used to gauge investor sentiment. It reflects the ratio of put options to call options purchased on a specific day, providing insights into market sentiment and expectations.

A ratio above 1 signals a higher put volume than call volume, suggesting increased bearish sentiment. Conversely, a ratio below 1 indicates a higher call volume, signaling a bullish outlook in the market.

Nvidia stock’s put/call ratio stood at 1.18 in the third quarter. It now stands at 1.44 — an increase of 22.03%.

While the hedge fund community trimmed their Nvidia holding in aggregate, some veteran hedge fund managers boosted their stake in the stock:

• Billionaire Investor Stanley Druckenmiller’s Firm Dumps Alphabet, Amazon, Boosts Investments In AI Leaders Nvidia And Microsoft
• Ray Dalio’s Bridgewater Makes Waves: Q4 Unveils Strategic Shifts With New Investments, Sector Expansion In Tech

Investors may want to exercise caution while considering an investment in Nvidia stock.

Read Next: Will Nvidia’s Mouthwatering Rally Hit A Wall? Fund Manager Says AI Stalwart Poised To ‘Grow Higher For Longer’ Ahead Of Q4 Results

Photo: Image created in MidJourney