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(Bloomberg) — Investors are so captivated by Nvidia Inc.’s prospects that they’re willing to follow the chipmaker’s lead when it comes to investing in small and medium-sized companies.
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Shares of several companies rose this week after Nvidia revealed its stake. One of his companies, Nano-X Imaging Ltd., doubled in value in his two days, increasing the medical device maker’s market value by about $400 million.
But how NVIDIA ended up owning about $380,000 worth of its own stock is not what most investors would expect. In 2017, Nvidia reported an investment in Zebra Medical, an Israel-based startup focused on using artificial intelligence to read medical images. Four years later, Nano-X acquired his Zebra in an all-stock deal. As a result, Nvidia would receive Nano-X stock in exchange for his Zebra stock.
“The market is speculating that Nvidia intentionally purchased Nano-X stock,” John Hempton, chief investment officer at Bronte Capital Management, said in a post on Substack on Thursday. “NVIDIA did not consciously choose to purchase Nano-X stock.”
Nano-X stock fell as much as 9.5% in post-market trading on Friday after closing 36% higher.
The chipmaker made this disclosure in a 13-F regulatory filing required of institutional investors with portfolios exceeding $100 million. Nvidia likely crossed that threshold late last year after Arm Holdings Plc, in which it holds a stake, went public.
Nvidia declined to comment on Nano-X stock when contacted by Bloomberg News.
–With assistance from Christine Flanagan.
(Adds stock transfer in fifth paragraph.)
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