Karthik Sarma, a successful investor who started his own hedge fund after working at Tiger Global, recently sold his Nvidia shares relatively quickly. He is now focusing on a value stock with potential for a big turnaround. Sarma’s investment portfolio is worth over $10 billion, with his net worth at $2.9 billion.

Sarma purchased Nvidia shares in the second quarter of 2023 and sold them in stages starting in 2024. The decision to sell was driven by the stock’s rising valuation, with its forward P/E ratio climbing above 40. Despite Nvidia’s strong position in the chipmaking industry, competition and changing market dynamics could impact its future growth potential.

Instead of Nvidia, Sarma has turned his attention to Tapestry, the company behind luxury brands Coach and Kate Spade. Coach accounts for the majority of Tapestry’s sales and has shown resilience in the market. With strategic initiatives to improve profitability, Tapestry’s brands have the potential for growth and increased shareholder value.

Sarma’s investment in Tapestry has proven profitable, with the stock up 135% in the past year. While Tapestry’s forward P/E ratio of 18 is lower than Nvidia’s, it is the highest valuation the stock has seen in years. Investors may want to wait for a price pullback before considering an investment in the luxury handbag company.

Read more at Nasdaq: Self-Made Billionaire Karthik Sarma Sold His Entire Stake in Nvidia and Bought This Incredible Stock Up More Than 100% in 12 Months