It’s worth keeping track of what the smart money billionaires are up to in any given quarter. Of course, nobody can tell where the markets are headed in the near term, but whenever a large number of big money managers start going after the same names at a given instance in time, maybe there’s a large hint dropped as to where the best deals could lie in the market.
Of course, it can be tricky to tell where the value is in a stock market that’s pretty much in melt-up mode despite the war in Iran. Thanks to the AI boom and the heated semi trade, the S&P 500 is making up for lost time.
Source: Nvidia
Nvidia is still great, but the risks are higher
Meanwhile, the TSX Index stands out as a relatively cheap place to put new money to work. In any case, it’s hard to ignore that more than a few hedge funds managing billions of dollars have taken some profits off the table when it comes to Nvidia (NASDAQ:NVDA), which is experiencing a breakout moment after Friday’s fabulous session of trading.
I have no idea how high Nvidia’s latest surge will take it, and while the valuation, at least on the surface, still looks practical given the fundamentals you’re getting as well as the double-dose of AI exposure, perhaps trimming isn’t the worst idea in the world if you’re a bit cautious about how the latest rally in the semi stocks could end. Of course, it’s also worth mentioning that there have been buyers as well as sellers in the smart money crowd. But the sales, at least in my view, were most striking!
With Michael Burry recently warning about the state of the AI trade, with his put options against certain names, including the likes of Nvidia, I think it’s only prudent to consider the less-heated names beyond Nvidia that could be spared if semis were to turn lower and the rest of tech returns to the less-loved names, some of which might be trading at steep discounts.
In short, time will tell if the billionaires were proven smart for trimming their Nvidia exposure in the fourth quarter of 2025. But, either way, I think it’s worth exploring what the smart money has been rotating into.
CP stock has been a Canadian hedge fund favourite last quarter
In terms of TSX stocks, Canadian Pacific Kansas City (TSX:CP) has been a hot pick-up, at least as of the last quarter of last year (the Q1 2026 moves are still in the process of trickling in). The last two years have been relatively muted for CP and the rest of the railway scene, with CP stock gaining just under 5% in the past two years.
That said, shares have enjoyed a bit of newfound momentum. And as money flows back into the neglected rails, I think that the cohort is starting to become a more interesting catch-up trade. Valuations are still modest, but the newfound momentum, I think, might pave the way for a breakout at some point down the line.
As a growthier rail, thanks in part to the Kansas City assets, the higher 26.2 times trailing price-to-earnings (P/E) multiple seems warranted. Perhaps the biggest source of applause, at least in my opinion, should be the massive 17.5% dividend hike served up just over a week ago following the release of some decent first-quarter numbers. That’s a big hike. And investors should take notice!
