Institutional Investors Are Selling One of Wall Street's Premier Trillion-Dollar Club Members (No, Not Nvidia!)
Key Points
Form 13F filings allow investors to track which stocks Wall Street's leading fund managers bought and sold in the latest quarter.
With one exception, institutional investors increased their collective positions in all members of the trillion-dollar club in the December-ended quarter.
President Trump's tariff and trade policy, coupled with profit-taking, may explain why institutional investors sent shares of this trillion-dollar AI powerhouse packing.
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Data is the fuel that keeps Wall Street's engine turning. The only problem for investors is that the amount of data being released, from quarterly earnings to near-daily economic reports, can make it challenging to digest. In other words, it's easy for something of importance to fall through the cracks.
For example, investors might have overlooked what's arguably one of the most important data dumps of the entire quarter on Feb. 17. This was the deadline for institutional investors to file Form 13F with the Securities and Exchange Commission. A 13F provides a concise snapshot of the stocks Wall Street's savviest money managers (with at least $100 million in assets under management) bought and sold in the latest quarter.
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Knowing which stocks, exchange-traded funds (ETFs), industries, and trends are piquing the interest of the market's top institutional investors can be worthwhile.
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During the fourth quarter, institutional investors were net buyers of all members of the trillion-dollar club, save for one.
Institutional investors are selling shares of this trillion-dollar AI powerhouse
According to data from 13F aggregation service WhaleWisdom.com, institutional investors ended 2025 by increasing their collective holdings in all members of the "Magnificent Seven," including artificial intelligence (AI) superstar Nvidia (NASDAQ: NVDA). Other current or former trillion-dollar club members whose institutional investor share ownership increased (per 13Fs) include Broadcom (NASDAQ: AVGO), Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB), Eli Lilly (NYSE: LLY), and Walmart (NASDAQ: WMT).
But this wasn't the case for premier AI highflier Taiwan Semiconductor Manufacturing (NYSE: TSM), which is also known as TSMC. The total number of shares held by institutional investors fell by 2.8% during the December-ended quarter to approximately 789.6 million.
Why sell shares of TSMC when it appears to be ideally positioned to benefit as an AI graphics processing unit fabricator? One possible reason is simple profit-taking. Between the third and fourth quarters, TSMC's shares vaulted from a range of $220-$240 to $290-$310. Not all money managers are buy-and-hold investors.
Additionally, there's a distinction that needs to be made between "hedge funds" and "institutional investors." Hedge funds (a subgroup of institutional investors), which tend to be more active and are focused on generating profits from investing, ever so slightly lowered their stake in Taiwan Semiconductor. This means the bulk of this net selling came from passive funds that buy and sell based on index weightings and formulas. In short, most of this selling doesn't appear nefarious.
It's also possible that some institutional investors headed for the exit due to President Donald Trump's tariff and trade policy. Although the U.S. and Taiwan hashed out a trade agreement in January of this year, trade uncertainty remained a concern as of the fourth quarter.
Although Taiwan Semiconductor Manufacturing's stock appears cheap, notable net selling by institutional investors during the fourth quarter has given investors something to think about.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, Nvidia, Taiwan Semiconductor Manufacturing, and Walmart. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
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