Three savvy hedge fund billionaires bought short positions in Righetti Computing in the third quarter.
- Israel Englander at Millennium Management sold 787,900 Amazon shares, reducing his position by 17%. He also added 522,100 shares of Righetti.
- Ken Griffin of Citadel Advisors sold 1.6 million Amazon shares, reducing his position by 35%. He also added 51,700 shares of Righetti.
- Steven Schonfeld of Schonfeld Strategic Advisors sold 253,700 shares of Amazon, reducing his position by 72%. He also added 8,900 shares of Righetti.
The important thing is that all three hedge fund managers won S&P 500 (^GSPC +0.88%, During the last three years, which makes him a good source of inspiration. Here’s what investors need to know about Amazon and Righetti.
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Amazon: Artificial Intelligence Stock Sold by Billionaires
Amazon has strong positions in three industries. It runs the largest online marketplace in North America and Western Europe by gross merchandise volume, is the world’s largest retail advertiser by sales, and is the largest public cloud by revenue for Amazon Web Services (AWS) cloud infrastructure and platform services.
The company is emphasizing on artificial intelligence (AI) to improve sales and efficiency. Its AI shopping assistant, Rufus, is on pace to deliver $10 billion in sales this year; Shoppers are 60% more likely to make a purchase when they connect with Rufus. Amazon has also developed more than 1,000 generative AI tools to optimize tasks such as inventory placement, demand forecasting and last-mile delivery.
Meanwhile, AWS is rapidly introducing AI features. Over the past few months, it has added tools to Bedrock AgentCore that help customers build and deploy generative AI agents. The company also added autonomous agents for software development, security improvements, and performance monitoring. And it expanded its portfolio of pre-trained models.
Strong third-quarter financial results show that those innovations are paying off. Revenue rose 13% to $180 billion, driven by particularly strong sales growth in the advertising services and cloud computing segments. Meanwhile, excluding two one-time charges, operating income rose 25% to $21.7 billion, meaning the company is becoming increasingly profitable (i.e., operating income is exceeding revenue).
Wall Street expects Amazon’s earnings to grow 18% annually over the next three years. This makes the current valuation of 32x earnings seem reasonable, especially when the company has beaten consensus earnings estimates by an average of 23% over the last six quarters.
So why did Israel Englander, Ken Griffin and Steven Schonfeld sell Amazon shares in the third quarter? Concerns about tariffs may have factored into the decision, or they may have seen attractive purchasing opportunities elsewhere. Still, don’t assume that they have lost confidence. All three still own Amazon, and excluding options, the stock is still in the top-10 for Englander and Griffin.
,4.12,0.94
current price
,23.76
key data points
$7.8B
day limit
,22.82 ,24.03
52wk range
,5.95 ,58.15
volume
274K
average volume
77m
gross margin
-6849.48,
Righetti Computing: Quantum computing stock bought by billionaires
Righetti specializes in superconducting quantum computing, a method by which microscopic superconducting circuits are cooled to near absolute zero to create the qubit, the basic unit of information in a quantum computer. The company has two important competitive moats:
- Righetti benefits from vertical integration, which means it realizes cost efficiencies by controlling its own supply chain. The company has a chip manufacturing facility where it makes quantum processors; It also develops the infrastructure (hardware and software) required to provide cloud-based quantum services.
- Righetti developed the first multi-chip quantum processor, a large chip consisting of many smaller chiplets. Scaling up quantum computers – creating systems with enough qubits to solve useful problems – is difficult because of high error rates. But Righetti believes its multi-chip architecture will help overcome that problem.
However, widely useful quantum computers – that is, systems that correct errors in real time and have enough qubits to solve complex problems – are probably a decade or two away. Experts believe quantum systems will need 10,000 to 1 million physical qubits to be widely useful, and Righetti’s product roadmap doesn’t even consider 1,000-qubit systems until 2027.
Basil Alsikafi, portfolio manager at White Brook Capital, highlighted Righetti’s mismatched fundamentals in his third-quarter investor letter. Year to date, Righetti reported revenues of $5 million but net losses of $198 million, meaning losses exceeded sales by 40 times. An even more worrying assessment is this.
Righetti trades at 860 times sales. for reference, palantir The most expensive stock in the S&P 500 with 115 times sales, which is absurd in itself. Righetti is seven times more expensive. At the same time, the company has increasingly diluted shareholders’ rights by issuing stock to offset its losses. The number of shares outstanding increased 71% last year.
So why did Englander, Griffin and Schonfeld buy shares of Righetti? I think the decision is about speed. They may hope to make a quick profit and then sell the shares. It would be wrong to assume that he has permanent confidence in Righetti. None of the three hedge fund managers have any money invested in stocks.
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