In late 1986, Paul Tudor Jones made a prediction.
“There will be some type of a decline, without a question, in the next 10, 20 months,” he said. “And it will be earthshaking; it will be saber-rattling.”
And less than a year later, on Oct. 19, 1987, the earth shook and the sabers rattled when the stock market crashed.
That day is now known as Black Monday, and while the rest of the world was busy losing an estimated $1.71 trillion, Tudor Jones, who founded Tudor Investment Corp. in 1980, tripled his money due to large short positions.
Peter Borish, the second most senior member of Tudor Investment, analyzed the 1929 pre-crash market compared to the 1987 market and found many similarities.
By betting on a crash in the U.S. stock market, Tudor returned 125.9% after fees, earning an estimated $100 million.
“It is not that we had any unfair knowledge that other people didn’t have; it is just that we did our homework,” Tudor Jones said of his success. “People just don’t want to believe that anyone can break away from the crowd and rise above mediocrity.”
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Tudor Jones: ‘Failure…sometimes a good thing.’
Tudor Jones, 69, has been breaking away from the crowd for quite a while. Born in Memphis in 1954, Jones got into the business world by trading cotton futures at the New York Cotton Exchange.
That job ended abruptly one day when Tudor Jones was fired for falling asleep at his desk after a night of partying in New Orleans.
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“Failure will give you a tattoo that will stay with you your whole life, and sometimes it’s a really good thing,” he said later about the incident.
Tudor Jones later served as treasurer in 1986 and then as chairman of the New York Cotton Exchange from August 1992 through June 1995.
Tudor Jones became a commodities broker for E.F. Hutton in 1976. Four years later, he founded Tudor Investment.
In 1990, as the Japanese equities bubble burst, Tudor Jones returned 87.4% by shorting the market.
Tudor Jones is making another prediction now, and this time, it’s about artificial intelligence, noting that AI could spark the next boom in productivity.
He told CNBC that only a few times in the past 75 years have technological advances been so crucial that they’ve unleashed 1% to 2% increases in productivity, and AI stands to be the next one of them.
And it’s almost impossible to talk about AI without mentioning Nvidia (NVDA) , which holds the market’s dominant position in artificial intelligence chip making.
A surge in AI investment, particularly from the so-called hyperscalers, or large cloud-computing service providers, has accelerated interest in the company.
Boosting its Stake
Nvidia’s H100 chip, which costs over $30,000, is designed for training and managing workloads associated with large language models (LLMs) like OpenAI’s ChatGPT.
Tudor Investments recently increased its holding in Nvidia, according to a filing with the Securities & Exchange Commission.
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The reports, known as 13F filings, are backdated to the end of the previous quarter.
While they do not include the full scope of holdings nor possible bets against a particular security, they do provide a glimpse into the strategies of some of the world’s biggest investors.
Tudor Investment’s filing shows that the hedge fund increased its holdings in Nvidia by a stunning 810%, to 132,000 shares from 14,000 shares. The stake would be valued at $65 million.
Tudor also increased its holdings in Splunk (SPLK) and Pioneer Natural Resources (PXD) , while starting new equity positions in Exxon Mobil (XOM) , Bristol-Myers Squibb (BMY) , Crown Castle (CCI) , and Expedia Group (EXPE) .
In addition, the firm closed out its equity stakes in New Relic (NEWR) , Airbnb (ABNB) , Mobileye Global (MBLY) and Adobe (ADBE) .
Meanwhile, in Nvidia’s first-ever 13-F with the SEC, the company noted a small $3.67 million stake in SoundHoundAI (SOUN) , a Santa Clara, California-based tech outfit focused on its signature voice-activated AI platform.
Nvidia also noted its $47.3 million stake in chipmaking rival Arm Holdings, which it tried to purchase outright in 2021 for around $40 billion.
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