Investment in US equities by Saudi Arabia’s Public Investment Fund (PIF) hit an all-time high of US$12.78 billion by end-2020, according to its latest stock exchange filings.

As yet, there does not appear to be a clear long-term strategy in the fund’s public equity investments. It missed out on potential stock price gains of more than US$30 billion in Tesla, having dumped the stake it built in the electric carmaker in Q419. PIF had held a stake worth US$2 billion in Elon Musk's company by end-September 2019, having reportedly indicated it would help the billionaire take the company private. If PIF had held onto those shares, its stake today would be worth around US$33 billion. Yet, it has kept hold of its stake in Tesla's rival Lucid Motors, which is reportedly ready to go public via a SPAC at a valuation of US$12 billion - a relative minnow compared to the EV giant.

This quarter, it invested US$3.3 billion in video game stocks, but the Saudi behemoth has been somewhat mercurial in previous quarters and quickly pivoted between stocks - acquiring and shedding large positions from one quarter to the next. It remains to be seen if PIF wishes to gain exposure to a fast-growing e-games market, which has flourished amid lockdowns, or just a quarterly dalliance.

Consistent themes include its stockholding in Uber, the ride-hailing app, which represented its largest shareholding at US$3.7 billion, as well as a stake in cruiseliner Carnival, despite the impact of the pandemic on the travel sector. It also held onto an ETF focusing on utilities, and retained a stake in goldminer NovaGold.

PIF’s tendency to buy and sell chunky stock holdings at a relatively rapid rate, shifting quickly from sector to sector, is in contrast to the strategy of many of its peers, ranging from NBIM’s position as a giant index tracker to the long-standing large public equity holdings held by the Kuwait Investment Authority.

Over time, we expect PIF’s strategy to become clearer, but one thing's for certain: PIF is ramping up its US equity exposure and its weight will continue to be a focus of debate as analysts seek to gain insight into the operations of the fast-growing and evolving Saudi fund.

The question is: will it learn from the mistake it made by ditching Tesla?

Related funds PIF
Related tags SPACs Equities Automotive