Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 626

Nvidia's CEO is selling. Here's why Aussie investors should care

Jensen Huang, CEO and co-founder of Nvidia, has begun offloading a chunk of his personal stake in the company. He recently he sold 100,000 shares worth almost US$15 million. That’s only the start. According to SEC filings, Huang’s trading plan allows him to sell up to 6 million shares over the next 12 months, roughly US$865 million at today’s prices.

This matters more than most realise. Many Australian investors are exposed to Nvidia through ETFs with heavy weightings in the stock. Huang’s selldown may seem small (less than 1% of his total holdings) but the signal is hard to ignore. Nvidia has nearly doubled in the past three years, riding the AI wave to a US$4 trillion valuation. It remains a dominant force in tech. But when the person with the clearest insight into the company’s future starts cashing out, it’s worth asking why.


Source: Morningstar

Investors, whether holding Nvidia through ETFs or directly, shouldn’t ignore the signal. But this isn't just about Nvidia. Many local companies still have founder involvement: Corporate Travel Management, Pro Medicus, ARB, Reece, Pinnacle Investment Management, Jumbo Interactive, WiseTech, Xero, Flight Centre and Mineral Resources. Insider behaviour in these businesses deserves close attention.

The Founder Effect

Founder-led companies often command premium valuations for good reason. Founders tend to operate with greater long-term vision, faster decision-making, and stronger alignment with shareholders. Jensen Huang embodies that ethos. The company is a 30-year success story. His leadership, strategic clarity, and early bet on GPU computing created one of the most valuable companies in history. But investors shouldn’t view founders as permanent fixtures, and their incentives evolve over time. Huang is now in his 60s. This sale doesn’t signal an exit, but it does mark a shift. The myth of founders being “all in” forever starts to break once they begin monetising their ownership at scale. Optics matter. Especially when their stock price is priced for perfection.

The significance of insider sales

In the short term, executives have an innate sense of whether their stock is overpriced. While they may not know where the broader market is heading, they have real-time visibility into internal forecasts, competitive dynamics, cost pressures, and upcoming risks. When they sell, especially in meaningful portions, it usually means the stock is either fairly valued or overvalued. We’ve seen this before. We’ve seen similar founder sell-down patterns followed by lacklustre stock performance. At Corporate Travel Management, founder Jamie Pherous sold $39 million worth of shares in 2021; the stock has since traded sideways despite a broader travel rebound. Appen’s founder Chris Vonwiller and CEO sold down $58 million and $2.9 million respectively in 2020, just before the company’s share price collapsed by over 80% amid structural headwinds. And at Dicker Data, founder David Dicker offloaded $200 million in 2024, which was a precursor to him stepping down fully a year later. The share price has fallen 30% since then.

One to keep watching today is Palantir, whose CEO and Co-founder Alex Karp has sold over US$1.9 billion worth of stock (c. 20% of his holdings) over the past year while promoting the company’s AI ambitions. Even if the sell down is pre-arranged as part of a 10b5-1 trading plan (which allows for pre-arranged stock sales), insiders decide when those plans are initiated and structured; they often coincide with peak sentiment and stretched valuations. The pattern is well documented. Lakonishok and Lee (2001) found that insider selling, particularly in aggregate and during periods of elevated valuations, often precedes negative abnormal returns. Cicero, Wintoki, and Zutter (2020) extended this by showing that clustered executive sales are predictive of weaker future stock performance, especially in high-momentum names.

The contrast: When founders are buying

While Huang is selling into strength, other CEOs are increasing their exposure. JPMorgan’s Jamie Dimon made headlines by personally purchasing US$25 million in stock during a market dip in 2016 – shares are up 5x since then. In Europe, Moncler CEO Remo Ruffini reinforced his control of the luxury fashion house by partnering with LVMH, and has recently been purchasing shares on market – watch this space.  Founder and executive buying is powerful not just because of the dollars involved, but because it is voluntary, rare, and often contrarian. It tells us when those closest to the business believe the market is mispricing its future. Importantly, these transactions often occur without fanfare and outside typical investor presentations. They’re a positive signal about motivation and incentives.

A practical lens

From an investment perspective, insider buying is far more actionable than selling. While there are many legitimate reasons for executives to sell stock - estate planning, diversification, liquidity - buying typically signals one thing: conviction. As investors, these signals deserve weight. Insider buying during uncertain periods can highlight mispriced opportunities, while insider selling near euphoric valuations invites a recheck of assumptions. The key is to observe who is putting capital at risk, when the sentiment is not universally bullish, and without any external obligation to do so. Strong founders create value. But watching how and when they extract value can be just as revealing. Are they buying during drawdowns? Are they participating in rights issues? Selling during rallies? Are they changing roles? These are often better signals of short-term direction than earnings guidance or investor day presentations.

Founder selling isn’t inherently bearish. Jensen Huang still owns billions in Nvidia stock and remains actively engaged. But large-scale insider selling during euphoric valuations is a signal worth considering. In a market increasingly influenced by narrative and momentum, paying attention to actions matters. Intent talks big, but action gets there first. When founders begin quietly taking risk off the table, it’s not always a call to exit. But it’s often a good time for investors to pause.

 

Lawrence Lam is the author of The Founder Effect (Wiley) and Managing Director of Lumenary Investment Management. He writes on leadership, markets, and the traits that define exceptional management. More at lawrencelam.org and lumenaryinvest.com. The material in this article is general information only and does not consider any individual’s investment objectives. Companies mentioned have been used for illustrative purposes only and do not represent any buy or sell recommendations.

 

RELATED ARTICLES

Lessons from the rise and fall of founder-led companies

When directors sell, should you sell too?

banner

Most viewed in recent weeks

Which generation had it toughest?

Each generation believes its economic challenges were uniquely tough - but what does the data say? A closer look reveals a more nuanced, complex story behind the generational hardship debate. 

Maybe it’s time to consider taxing the family home

Australia could unlock smarter investment and greater equity by reforming housing tax concessions. Rethinking exemptions on the family home could benefit most Australians, especially renters and owners of modest homes.

The best way to get rich and retire early

This goes through the different options including shares, property and business ownership and declares a winner, as well as outlining the mindset needed to earn enough to never have to work again.

A perfect storm for housing affordability in Australia

Everyone has a theory as to why housing in Australia is so expensive. There are a lot of different factors at play, from skewed migration patterns to banking trends and housing's status as a national obsession.

Supercharging the ‘4% rule’ to ensure a richer retirement

The creator of the 4% rule for retirement withdrawals, Bill Bengen, has written a new book outlining fresh strategies to outlive your money, including holding fewer stocks in early retirement before increasing allocations.

Chinese steel - building a Sydney Harbour Bridge every 10 minutes

China's steel production, equivalent to building one Sydney Harbour Bridge every 10 minutes, has driven Australia's economic growth. With China's slowdown, what does this mean for Australia's economy and investments?

Latest Updates

Superannuation

Super crosses the retirement Rubicon

Australia's superannuation system faces a 'Rubicon' moment, a turning point where the focus is shifting from accumulation phase to retirement readiness, but unfortunately, many funds are not rising to the challenge.

Economy

Should Australia follow Trump's new brand of capitalism?

A new brand of capitalism may be emerging - one where governments take equity in private companies. Is it state overreach, or a smarter way to fund public goods without raising taxes?

Gold

Why gold may keep rising - and what could stop it

Central banks are buying, Asia’s investing, and gold’s going digital. The World Gold Council CEO reveals the structural shifts transforming the gold market - and the one economic wildcard that could change everything. 

Investment strategies

Fact, fiction and fission: The future of nuclear energy

Nuclear power is back in the spotlight, including in Australia. For investors exploring the sector, here are four key factors to consider in this evolving energy landscape. 

Taxation

The myth of Australia’s high corporate tax rate

Australia’s corporate tax rate is widely seen as a growth-killing burden. But for most local investors, it’s a mirage - erased by dividend imputation. So why is it still shaping national policy? 

Taxation

Should we change the company tax rate?

The headline 30% corporate tax rate masks a complex system of dividend imputation and franking credits that ensures Australian shareholders are taxed only once, challenging traditional measures of tax competitiveness. 

Investing

Noise cancelling for investors

A lot of the information at an investor's fingertips today has little long-term value. The modern investing greats are not united by access to faster information, but by their ability to filter out what doesn’t matter.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.