Wall Street billionaires dump Alphabet. How they traded 7 other portfolio stocks as well

Published Fri, Feb 16 20241:07 PM EST

Kevin Stankiewicz @in/kevin-stankiewicz-b5593466 @kevin_stank

Wall Street's whales turned on Alphabet . Hedge fund managers and billionaire investors alike lightened up on shares of the Google parent — or dumped them all together — in the fourth quarter of 2023, regulatory filings revealed. While backward-looking, these disclosures nevertheless shine a light on the moves influential investors have made. The sales of Alphabet came during the final three months of a strong year for the Club name and the overall stock market. Shares jumped 58.3% in 2023 — more than double the S & P 500 's 24.2% advance. In the fourth quarter, specifically, shares of Alphabet rose 6.75%. So far in 2024, the stock was up 1% — underperforming the S & P 500's year-to-date gain of 5%. GOOGL 1Y mountain Alphabet's stock performance over the past 12 months. Dan Loeb's Third Point hedge fund and billionaire investor Stanley Druckenmiller sold their entire stakes in the search engine giant during the three months ended Dec. 31, according to 13F disclosures with the Securities and Exchange Commission released this week. Third Point owned Alphabet for less than a year , while Druckenmiller traded in and out of the stock in recent quarters. Both of their holdings had been worth more than $100 million. Third Point and Druckenmiller's exits were among the Club-stock-related trades that surfaced this week in the latest collection of 13Fs, which institutional investors with at least $100 million in assets are required to submit to the SEC every quarter. The Q4 disclosure cycle revealed a slew of sales in tech stocks that rode Wall Street's wave of artificial intelligence optimism to impressive performances in 2023. Of course, the motivations behind the pros' decisions cannot be determined from the regulatory filings alone. But, in general, the decision to take something off the table in a high-flying stock during the fourth quarter is understandable because we took similar action at the start of January , trimming our positions in eight holdings that had big runs last year. In addition to Alphabet, those stocks were the rest of our Significant Six — Meta Platforms , Microsoft, Amazon, Apple and Nvidia — plus Salesforce and Palo Alto Networks . 13F shortcomings While informative to get into the minds of the whales, the 13Fs contain no detailed list of trades — just an end-of-quarter snapshot. A fund's holdings may very well have changed by the time the previous quarters' filings are revealed. For certain hedge-fund managers known to be nimble traders, like David Tepper, this is particularly relevant. Additionally, short positions — bets that a stock will drop in value — are not disclosed in 13Fs, making it difficult to determine a fund's complete attitude toward the market. Some Wall Street veterans merely pared back their exposure to Alphabet in the quarter, including David Tepper's Appaloosa Management . The firm trimmed its Alphabet stake by 16%, ending the year with a position worth about $324 million. Baupost Group — the hedge fund run by value investor Seth Klarman — sold about 23% of its Alphabet stock over the same stretch. Baupost's stake was worth nearly $416 million at the end of the quarter. The Club has long owned Alphabet and our other Significant Six mega-caps. However, in the wake of the Google parent company's latest earnings report that showed weakness in its bread-and-butter ad business, Jim Cramer acknowledged he "continues to wonder whether we need to own Alphabet." Not everyone was selling Alphabet in the fourth quarter. Michael Bury of "Big Short" fame initiated a long position in the tech titan during the quarter with nearly $5 million at year-end. Bill Ackman's Pershing Square Capital Management left its large Alphabet stake unchanged in the period. It was worth about $1.9 billion at year-end. During the fourth quarter, Tepper also reduced his stake in Nvidia , the leading maker of AI chips, which saw its value more than triple in 2023 on its way to being the top-performing stock in the S & P 500. Tepper sold nearly 23% of his Nvidia stock over the three-month window, though it was still among his biggest holdings at year-end. Tepper added modestly to his sizable stakes in Microsoft and Amazon, which were worth $639.27 million and $600.16 million, respectively, at the end of the quarter. NVDA 1Y mountain Nvidia's stock performance over the past 12 months. Druckenmiller — who closed his hedge fund more than a decade ago and now runs the Duquesne Family Office — also sold some of his Nvidia shares in the fourth quarter. But it, too, remains among his largest holdings, according to the SEC disclosure. The investor also bought Nvidia call options, the filing shows, giving him the right, but not the obligation, to buy additional shares of the chipmaker at an agreed-upon price in the future. In non-tech moves, Druckenmiller reduced his stake in Eli Lilly , another standout stock in 2023, by roughly 11% over the final three months of the year. His position was worth about $234.7 million at year-end. He also exited his small Danaher position. Lilly and Danaher are positions in Jim's Charitable Trust , the portfolio used by the CNBC Investing Club. Warren Buffett's Berkshire Hathaway sold a small sliver of its lone Significant Six holding, Apple , in the fourth quarter, according to the company's filing. Berkshire parted ways with about 10 million shares of the iPhone maker, leaving the conglomerate with more than 905 million shares, worth $174.35 billion, at the end of the quarter. Buffett has long sung Apple's praises, calling it a "better business" than anything else in Berkshire's vast corporate empire, which includes BNSF Railway and auto insurer Geico. Against that backdrop, the fourth-quarter sales appear to be prudent portfolio management — a move similar to our own in early January when we trimmed Apple to right-size the position. That means we sold a little to keep Apple's weighting in relation to our other holdings from becoming too big. After all, we want a run a diversified portfolio. We don't want to be the Apple fund. CRM 1Y mountain Salesforce's stock performance over the past 12 months. Another 2023 winner that saw selling in the fourth quarter: Salesforce . Jeff Smith's Starboard Value — among the first of many activist investors to publicly take aim at Salesforce — trimmed its holdings of the enterprise software giant by 11% during the period. The firm's stake at year-end was still worth about $404 million. Starboard also cut back on Salesforce stock in the first three quarters of 2023, as CEO Marc Benioff repeatedly demonstrated improved profitability and cost discipline to the satisfaction of Wall Street. Smith's fund continues to own about 1.54 million Salesforce shares, down from 3.03 million at the end of 2022, the year its activist campaign began. Loeb's Third Point and Inclusive Capital , two activist firms that had also targeted Salesforce, sold their positions entirely in the first half of 2023. Bottom line The information revealed in 13Fs shouldn't serve as the basis for any investment decision, but, as part of the larger "buy and homework" process that Jim preaches, it's worth keeping an eye on what's in them. From a portfolio management perspective, it's hard to argue with any investor — whether they're a Wall Street pro or an individual at home — who trimmed their stakes in 2023 tech winners in recent months. We did it ourselves because our investment discipline called for it. As Jim has said, nobody ever got hurt taking a profit. (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

A sign is posted in front of a Google office on January 30, 2024 in Mountain View, California.

Justin Sullivan | Getty Images

Wall Street's whales turned on Alphabet.