In May 2018 we started this position at a price of approximately USD 250. We never try to time the market as based on all the evidence, no investor gets the time right long term. At the time we believe that USD 250 was a good price but we were wrong. Nvidia had pushed a lot of inventory into the channels mostly driven by the bitcoin mining hype at the time. In the subsequent quarters, the company couldn't sell as much product as they had to wait until the inventory in the channel was back to normal. They simply overestimated the demand.
As a result the quarterly results in the subsequent quaerters disappointed the markets and the share price dropped to less than USD 150 in May 2019. We then decided to add to our position at that time.
By reducing our position we are essentially selling some of the shares we bought at USD 150 at a price of USD 252, which is a gain of approximately 68%. In addition we continue to be optimistic for Nvdia but trimmed back the position that grew too big for our taste within the portfolio. We believe that Nvidia's products continue to be well-positioned for graphics and artificial intelligence (AI) applications, both on-site and in the datacenter.
When you get the timing wrong - or more specifically, when the timing turns out to be wrong - then it makes sense to have another look at the company and consder buying more shares if all information and data available point confirm the investmen story. In our experience, if the investment story was good from the beginning buying more at the reduced level can boost the returns.
Disclosure: We hold positions in all of the companies mentioned in this post. Do your own due diligence and consult with a financial advisor before making financial decisions. This blog is for inspiration only. All responsibility with decisions you make is yours.
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