"This stock helped me make the most money in my life," hedge fund discusses why it liquidated NVIDIA
"You have to sell when it's time to sell; you can't fall in love with a stock." Jonah Cheng, a hedge fund manager managing $100 million in assets, chose to completely liquidate his position in the first quarter after his fund made a 42% profit last year thanks to NVIDIA. Behind the liquidation are his multiple concerns, including delays in the GB200 rack, inventory risks, lack of upward revisions in earnings forecasts, and a slowdown in spending by cloud computing companies
Hedge fund manager Jonah Cheng, who accurately bet on NVIDIA's surge, completely liquidated his position in this stock, which had brought him the highest returns of his career, in the first quarter. The star analyst admitted that multiple risk signals forced him to part ways with his "favorite."
According to the latest report from Bloomberg, Jonah Cheng, founder of the hedge fund Captain Global Fund, has completely liquidated all his holdings in NVIDIA in the first quarter of this year. The technology stock fund he founded, which was previously a UBS Group analyst, achieved a return of 42% last year, with NVIDIA being its largest source of profit.
In an interview, he stated that NVIDIA was one of the first stocks he bought when he founded the fund in 2016, and he has continuously increased his position over the past nine years, witnessing the chip manufacturer's stock price soar over 1400% in the past five years. Managing approximately $100 million in assets, Jonah Cheng confessed:
I really like NVIDIA; it is the stock that has made me the most money in my life... But when I need to sell, I have to sell. You can't fall in love with a stock.
Multiple Concerns Behind the Liquidation
Jonah Cheng's decision to liquidate was not made on a whim.
He pointed out five major concerns behind the liquidation: first, delays related to NVIDIA's GB200 rack; second, inventory risks; third, a lack of upward revisions in earnings forecasts; fourth, competitive threats from custom chips; and finally, uncertainty regarding the spending pace of cloud computing companies.
Despite NVIDIA's stock price soaring over 1400% in the past five years and remaining a favorite among most Wall Street analysts, cautious voices are beginning to emerge. On April 30, Seaport Global Securities unusually gave NVIDIA a "sell" rating, predicting that the growth rate of AI budgets may slow down by 2026. The famous "big short" Michael Burry also bought put options on NVIDIA earlier this year.
Turning to "Sell Shovelers"
Jonah Cheng's portfolio adjustments are not limited to NVIDIA. By the end of 2024, he also liquidated his position in TSMC, the world's largest chip foundry, citing geopolitical risks and reduced visibility in cloud service provider spending. Currently, he prefers small and medium-sized suppliers that provide key components to tech giants. His major holdings include AI server manufacturer Wiwynn Corp., cooling manufacturer Asia Vital Components Co., and high-speed connectivity solution provider Credo Technology.
Although temporarily stepping back, Jonah Cheng has not lost faith in NVIDIA's long-term value or established a short position. "If the company raises its earnings outlook, I would still buy back," said the fund manager, known for his calm demeanor, leaving the possibility of returning open
