Guardian Fund: “Palantir (PLTR) is Becoming One of the More Important Global Software Companies”

Guardian Fund, an investment management firm, published its second quarter 2021 investor letter – a copy of which can be downloaded here.  A quarterly portfolio return of +16.85% measured in euros, net of fees and expenses was recorded by the fund for the first half of 2021. You can view the fund’s top 5 holdings to have an idea about their top bets for 2021.

In the Q2 2021 investor letter of Guardian Fund, the fund mentioned Palantir Technologies Inc. (NYSE: PLTR), and discussed its stance on the firm. Palantir Technologies Inc. is a Denver, Colorado-based software company, that currently has a $43.71 billion market capitalization. PLTR delivered a -1.10% return since the beginning of the year, while its 3-month revenues are down by -3.12%. The stock closed at $23.29 per share on July 09, 2021.

Here is what Guardian Fund has to say about Palantir Technologies Inc. in its Q2 2021 investor letter:

“The success of the private sector to innovate in order to help people through the lockdowns and to produce vaccines atrecord speed at scale has been impressive. The fact that almost every public institution was struggling to be effective no matter how hard some of the people worked, shows the fundamental need of the public sector to become data-driven and invest in data infrastructure.

Government institutions have to partner with enterprises such as Palantir to become digitalnative. The public sector will always struggle to attract the most talented engineers as compensations cannot be justified with tax money and therefore this must be a partnership with specialized private enterprises. This is a great opportunity for Palantir especially as it has already
shown to be capable of working with demanding and complex public institutions entrusting it to work on the most critical and sensitive matters.

The news section of Palantir’s website gives insight in where new business is coming from. The main opportunity is in enterprise software and the faster onboarding time and increased self-service of clients is a positive sign. We believe Palantir is becoming one of the more important global software companies.

In addition, Palantir has quietly become a significant investor, investing well over USD 200 million in eight companies. Thereby, it is following the lead of companies like Tencent, Alphabet, and Shopify of establishing valuable investment portfolios.”


Based on our calculations, Palantir Technologies Inc. (NYSE: PLTR) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Palantir Technologies Inc. was in 32 hedge fund portfolios at the end of the first quarter of 2021, compared to 38 funds in the fourth quarter of 2020. PLTR delivered a -5.59% return in the past month.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

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Disclosure: None. This article is originally published at Insider Monkey.