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Nvidia’s Nano-X Stake Is From Biotech Deal, Not Direct Buy

In Business
February 18, 2024

(Bloomberg) — Investors are so taken with Nvidia Corp.’s prospects that they are willing to follow the chipmaker’s lead when it comes to investing in smaller companies.

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Shares of several companies rallied this week after Nvidia disclosed owning stakes in them. One, Nano-X Imaging Ltd., saw its shares double over two days, adding some $400 million in market value to the medical-devices maker.

How Nvidia came to hold about $380,000 worth of its shares, though, isn’t what most investors might expect. Back in 2017, Nvidia reported a stake in Zebra Medical, an Israeli-based startup focused on using artificial intelligence to read medical images. Four years later, Nano-X acquired Zebra in an all-stock deal. That resulted in Nvidia’s receiving shares in Nano-X in return for its Zebra stake.

“The market is presuming that Nvidia consciously purchased” the stake in Nano-X, John Hempton, chief investment officer at Bronte Capital Management, wrote in a post on Substack Thursday. “Nvidia did not consciously choose to buy Nano-X stock.”

Nano-X shares lost as much as 9.5% in postmarket trading on Friday, after closing 36% higher.

The chipmaker made the disclosures in a 13-F regulatory filing, required for institutional investors whose portfolios exceed $100 million. Nvidia likely crossed that threshold at the end of last year after a company it owns a stake in, Arm Holdings Plc, went public.

Nvidia declined to comment on its Nano-X stake when contacted by Bloomberg News.

–With assistance from Cristin Flanagan.

(Adds share move in fifth paragraph.)

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