The interest of the Caisse de dépôt et placement du Québec (CDPQ) in the Magnificent Seven and American banks continues to grow.
Published at 5:00 a.m.
Quebec’s largest institutional investor has just revealed that it made significant new investments in the third quarter in several large financial institutions in the United States as well as in the seven American companies whose market capitalization has become gigantic.
In total, the Fund purchased more than US$1.5 billion worth of shares in Microsoft, Apple, Nvidia, Amazon, Meta, Alphabet (Google) and Tesla during the summer months.
During this period, the Fund also purchased more than US$600 million worth of shares in JPMorgan, Bank of America, Citigroup and Wells Fargo.
These transactions notably increased the stake in Apple by 20%, increased the investment in Amazon by 40% and increased the investment in Tesla by 45%.
The stake in JPMorgan also almost doubled, while the purchase of 5 million shares of Bank of America caused the stake in this bank to jump by 200%.
All these investments are detailed in a document filed in recent days with the Securities and Exchange Commission to detail the Caisse’s investments in companies listed on the stock exchange in the United States at the beginning of October.
The Trump effect
The transactions positioned the Caisse favorably for the surge in American financial securities and Tesla observed immediately after the election of Donald Trump.
Tesla’s stock jumped 15% on November 6, JPMorgan’s stock jumped 12%, while Wells Fargo’s stock gained 13% that day.
Donald Trump’s victory appeared to enthuse investors thanks to optimism over his deregulation and tax cut agenda.
Contacted by The Pressthe Caisse de dépôt, whose net assets amount to approximately 452 billion, did not wish to comment on the rebalancing of its stock market investments.
The weight of digital giants has increased significantly in the CDPQ portfolio since the pandemic.
Management made a significant change after realizing that the Fund’s portfolio was underexposed to GAFAM (Google, Apple, Facebook, Amazon and Microsoft) which today are called the magnificent seven with the addition of Nvidia and Tesla.
Exactly four years ago, the Quebec institutional manager held barely 6,000 Nvidia shares. The Fund now has 17 million. During this same period, the number of Apple shares held by the Fund increased from 1.9 million to 9.5 million.
The increase in importance of Amazon in the portfolio is also impressive. The Fund had 54,000 Amazon shares at the end of summer 2020. It now holds 5.8 million.
For Tesla, the number of shares in the Fund’s portfolio increased from 19,000 to 1.3 million in four years.
In all, the overall value of CDPQ’s stakes in the Magnificent Seven now stands at nearly US$10 billion.
The giant Nvidia
The semiconductor manufacturer Nvidia risks having a say in the future on the stock markets. Nvidia will present its quarterly results this Wednesday after the stock markets close, and management will comment on its performance in a conference call with analysts.
Nvidia joined Apple as the world’s largest market capitalization this year following its share price surge driven by strong demand for its products used to support the development of artificial intelligence.
With the purchase of nearly 2 million additional Nvidia shares during the months of July, August and September, the Caisse de dépôt’s stake in the company is now worth nearly 2.5 billion US dollars.
Nvidia is one of the three largest American stock stocks in the Caisse’s portfolio alongside those of Microsoft and Apple.
The Caisse also reduced its investment in Intel by 60% during the summer by selling a total of 4.7 million shares of this Nvidia competitor.
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