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.

 

  •   27 August 2025
  • 5
  •      
  •   

RELATED ARTICLES

The DNA of long-term compounding machines

Lessons from the rise and fall of founder-led companies

When directors sell, should you sell too?

banner

Most viewed in recent weeks

Why spending more in early retirement can improve lifetime income

Conventional wisdom encourages retirees to preserve superannuation. But if those likely to qualify for the Age Pension later in life spend a little more today, it may deliver higher lifetime income and a more stable retirement.

It’s time for LICs to die

A high-profile dividend cut and a prominent fund manager’s apology have reignited a long-running debate. If investors can access similar exposures more cheaply and efficiently elsewhere, what exactly is keeping LICs alive?

Testamentary trusts survived the trust tax. The drafting battle has just begun.

The fight over testamentary trusts looked settled. Then the draft legislation arrived. Hidden in a technical detail is a question that could force many families to rethink wills they thought were already future-proof.

Is it time to bail on Australian stocks?

For generations, Australian investors have backed banks, miners and dividends. But has that loyalty come at a cost? A look at the numbers raises an uncomfortable question about where future returns will come from.

The new capital gains tax trap for your portfolio

Investors have long accepted one portfolio rule without much question. A major tax shift could change that calculation entirely, forcing difficult trade-offs between risk, discipline and an overlooked cost lurking beneath.

How the typical Australian Family could save $844,350 in taxes

The value of a testamentary trust is not determined by wealth alone. Depending on circumstances, it can reduce the tax burden on inherited income, create efficiencies and help build intergenerational wealth.

Latest Updates

Fixed interest

Higher yields are creating opportunities in global bonds

Bond markets are adjusting to a new reality, but not in the ways investors expect. With markets repricing and capital competing for attention, investors may need to rethink where resilience and opportunity lie. 

Economy

Are we in a recession?

What if the warning signs are already everywhere? From supermarket aisles to company failures, investors are being bombarded with recession signals. But most face a different risk that can be just as dangerous for portfolios. 

SMSF strategies

Meg on SMSFs - Division 296 actuarial certificates

The tax bill might be yours, but the event that caused it may not be. A key Division 296 calculation can sometimes attribute earnings in ways that many SMSF trustees won't instinctively expect or fully appreciate.

Property

The first impact of negative gearing reform is not the tax bill

Negative gearing changes formally begin in 2027, but the first consequences may already be here. A subtle shift is quietly influencing who can borrow, how much they can access and which property strategies still stack up.

Economy

The oil market is running out of easy answers

The biggest threat to markets may not be what investors are watching. The numbers have stopped adding up and supply is harder to measure, with forecasts becoming simple guesses. A more fragile reality is being masked.

Investment strategies

The state of investor knowledge in Australia

Australians are investing more than ever, yet a surprising divide is emerging between those building wealth effectively and those making costly mistakes. Surprisingly, the gap has little to do with income, age or starting capital.

Taxation

Complexity and capital gains

A case study shows that the ‘30% minimum CGT’ is a poorly conceived tax that adds significant complexity to an already over-complex system. A less complicated model would create a much fairer progressive tax scale.

Sponsors

Alliances

  • ASA-Logo-RGB-ActiveGreen-web.png

© 2026 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.