- Elliott Management bet against Nvidia using put options last quarter, filings show.
- Paul Singer’s firm had “at least $600 million in downside exposure” to the chip maker, one analyst said.
- Elliott told clients last year that Nvidia was in a “bubble” and AI was “overhyped.”
Elliott Management bet big against Nvidia after telling clients the chipmaker’s stock was in a “bubble” and artificial intelligence was “overhyped.”
Billionaire investor Paul Singer’s firm bought put options last quarter on 1.45 million Nvidia shares with a notional value of about $195 million as of December 31, a Securities and Exchange Commission filing revealed on Friday.
The activist-investing specialist also owned puts worth a notional $1.1 billion on the Invesco QQQ ETF, which tracks the Nasdaq-100 index. Moreover, it held puts worth a notional $4.2 billion on the SPDR S&P 500 ETF Trust, which follows the S&P 500 index. Nvidia is the second-largest constituent of both indexes, after Apple.
Between the three short positions, Elliott had “at least $600 million in downside exposure to Nvidia directly or indirectly” at the end of December, Gerry Fowler, head of European equity strategy at UBS, told Business Insider.
Elliott, which manages roughly $70 billion of assets, appears to have “specifically shorted Nvidia via put options” and bet against the largest US companies more broadly to hedge its risk on long positions such as Southwest Airlines and Pinterest, Fowler said.
However, Fowler emphasized the strike prices and maturities of the puts aren’t disclosed, so the “cost of this protection could be quite low or high — we just don’t know.”
In a client letter obtained by The Financial Times last year, Elliott’s bosses said that Nvidia and other Big Tech stocks were in “bubble land” and questioned whether the massive demand for Nvidia’s graphics chips would last.
They also predicted that some AI applications were destined to always cost too much, function poorly, consume too much energy, or betray users’ trust.
Elliott has only disclosed a Nvidia position once before, according to SEC filings dating back to 2001. It owned 5,000 shares worth $4.5 million at the end of March 2024 but sold them within three months.
Nvidia stock is almost flat this year after soaring just over 100% in the past 12 months, leaving it worth $3.45 trillion — second only to Apple in value.
Elliott’s US stock portfolio was worth about $9 billion at December’s close, excluding options and convertible debt securities. Its top positions included $2 billion stakes in Triple Flag Precious Metals and Southwest Airlines, and a $1.8 billion position in Suncor Energy.
It’s worth highlighting that Form 13Fs only provide a snapshot of a firm’s US stock holdings on a single day, roughly six weeks before their release. They also exclude shares sold short, stakes in private companies, foreign-listed assets, and non-stock assets such as gold and real estate, meaning they don’t always paint a full picture of an investor’s strategy.
Elliott declined to comment.
