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Stanley Dron Miller the billionaire investor that predicted the rise of Nvidia updated his $4 billion portfolio at the end of the first quarter and he's made some immense changes he sold off 85% of his Nvidia position which used to be his number one holding just three months before so let's see where he allocated his Capital what is his number one holding now and what he believes to be next in the stock market but first let's see what are some of the other positions he reduced and what all these have in common he sold 56% of his verive position after the digital infrastructure stock became really expensive with a price to earnings ratio around 36 times moreover he sold 32% of data storage company Seagate technology and then he sold a massive 85% of Li ly lii ly is executing very well with increasing margins and solid growth expected it used to be Dron Mill's fourth position but the stock NOW trades around 18 times Enterprise Value divided by the next 12 months Revenue which is as expensive as some of the best AI companies as for instance Palante also trades at 18 times lastly Dron Miller sold 71% of his Nvidia shares Nvidia used to be his biggest position just 3 months before after he bought the stock around $183 but we later see that he has now a new top holding which is a massive pivot from what he used to own but before we get there let's see the positions he liquidated since he sold off some of his top five positions draal Miller sold his entire position in stocks like Chevron lamb Weston UBS and most importantly he liquidated his entire option in Nvidia this position alone was 7% of his portfolio and was bought just 3 months before when the stock was around $500 in total considering that he sold both the stock and the call options draal Miller decreased his Nvidia position by a total of 85% so naturally people are asking why is one of the early proponents of AI massively selling his AI stocks well simply put because they did too well 150 to 900 yes we we did cut that position a lot of other positions in late March I just need a break we've had a hell of a run a lot of what we recognized has become recognized by the marketplace now so the main reason why dra Miller sold his AI stocks is because they grew too fast and now the growth prospects are mostly priced in even if the AI Market will keep growing the stock prices already reflect the scenario so there is less upside for investors and one important factor why this is happening is feds pivot from December when for the first time they hinted at cutting interest rates why are we even talking about Cuts because if you remember we did trillions of dollars of QE because it was 1.7 instead of two over a decade but somehow now that we're at three we've got to start cutting rates to bring in a smooth Landing so to me it didn't make any sense it was a huge mistake fed's pivot from December was an important Catalyst that disrupted all asset classes including equities they set Financial conditions on fire again Bitcoin I can't remember where it started from but it went from like 30,000 to 70,000 equities obviously credit interest rates but besides the high expectations of the stock market another factor that makes draon Miller stay away from AI stocks is the fact that the government is spending recklessly in a period when the economy is strong we've got a 7% budget deficit at full employment it's just it's unheard of we don't need spending right now we just need the government get out of the way and let the private sector do its thing in his opinion this is wrong and as a result the innovation in the AI space might be slowed down and my new fear now is that spending and the resulting interest rates on the on the debt that's been created are going to crowd out some of the Innovation that otherwise would have would have taken place to sum up on the short term dra Miller believes that there is less upside in the AI stocks than it used to be but he's still a firm believer in the long-term prospects and he compares the growth in AI today to the growth of the internet in 1999 if you bought the NASDAQ in 99 it went down 80% that's not to happen with AI but it could rhyme AI could rhyme with the internet as as we go through all this Capital spending we need to do the big payoff might be four to 5 years from now so AI might be a little overhyped now but underhyped long term so what is Stanley Dron Miller buying now firstly he increased several positions like data companies Zoom info Manufacturing Company Flex which is now 2.5% of his portfolio and networking company Arista which now has a 2.8% portfolio weight moreover he also increased his position in industrial equipment company Woodward and genomics Company NATA which is now his sixth biggest holding with 4% of his portfolio but more interesting than the positions he increased are the new positions opened Ja Miller opened is more position of $17 million or 4% of his portfolio in Palante at at an average cost of $20.5 he also opened a small position of $20 million in Apple at an average cost of $184 he also invested $31 million or.
7% of his portfolio in meta at an average cost of $420 and $153 million in semiconductors company coherent at an average price of $51 lastly he invested 6 $64 million or 15% of his portfolio in his newest holding iwm this is the thicker symbol for the Russell 2000 which is an ETF that covers Us small caps it has exposure to many small caps in the US like super micro computers micro strategy carvana or elf this is very different from what driller used to invest in since it is a diversified class of assets draon Miller is known to take large concentrated bets like he did recently with Nvidia my idea of risk control is a little non-conventional I like putting all my eggs in one basket and then watching the basket very carefully but his pivot towards Mo caps shows that this class of assets has potential upside for two reasons firstly the main difference between the small caps and the large caps is the composition of the index while the small cap caps have higher weights for Industrials financials and Healthcare the large caps index has 32.8% invested in tech companies so making the small cap index his number one holding is another way for staling draon Miller to be pivoting away from softer stocks but secondly the most important reason why the small caps are becoming attractive is because this asset class might benefit from lower interest rates these smaller companies take on debt to grow faster so lower interest rates might make borrowing easier and the cost of debt will decline lastly considering valuations the small caps are cheaper than the large caps with a price to sales multiple of 1.3 times compared to 2.7 times for the large caps if you feel like you've learned anything of value or you want to see more videos like this one please hit the like button and subscribe the YouTube algorithm really believes that you would enjoy this next video
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