Hedge Funds Are Dumping Palantir Technologies Inc. (PLTR)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Palantir Technologies Inc. (NYSE:PLTR).

Palantir Technologies Inc. (NYSE:PLTR) was in 26 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 38. PLTR investors should pay attention to a decrease in support from the world’s most elite money managers in recent months. There were 32 hedge funds in our database with PLTR positions at the end of the first quarter. Our calculations also showed that PLTR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

If you’d ask most shareholders, hedge funds are seen as worthless, old investment vehicles of the past. While there are over 8000 funds trading at the moment, We choose to focus on the leaders of this group, about 850 funds. Most estimates calculate that this group of people direct the lion’s share of the hedge fund industry’s total asset base, and by monitoring their top investments, Insider Monkey has determined several investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to review the fresh hedge fund action regarding Palantir Technologies Inc. (NYSE:PLTR).

Do Hedge Funds Think PLTR Is A Good Stock To Buy Now?

At second quarter’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PLTR over the last 24 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

The largest stake in Palantir Technologies Inc. (NYSE:PLTR) was held by ARK Investment Management, which reported holding $808.8 million worth of stock at the end of June. It was followed by Citadel Investment Group with a $157.9 million position. Other investors bullish on the company included D E Shaw, Citadel Investment Group, and Duquesne Capital. In terms of the portfolio weights assigned to each position Andar Capital allocated the biggest weight to Palantir Technologies Inc. (NYSE:PLTR), around 7.86% of its 13F portfolio. Crestwood Capital Management is also relatively very bullish on the stock, dishing out 6.79 percent of its 13F equity portfolio to PLTR.

Due to the fact that Palantir Technologies Inc. (NYSE:PLTR) has faced bearish sentiment from the smart money, we can see that there is a sect of hedgies that slashed their full holdings heading into Q3. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the biggest position of all the hedgies watched by Insider Monkey, valued at about $81.6 million in stock. Jonathan Soros’s fund, JS Capital, also cut its stock, about $21.8 million worth. These moves are important to note, as total hedge fund interest dropped by 6 funds heading into Q3.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Palantir Technologies Inc. (NYSE:PLTR) but similarly valued. We will take a look at Lululemon Athletica inc. (NASDAQ:LULU), Thomson Reuters Corporation (NYSE:TRI), Johnson Controls International plc (NYSE:JCI), EOG Resources Inc (NYSE:EOG), TC Energy Corporation (NYSE:TRP), Align Technology, Inc. (NASDAQ:ALGN), and Monster Beverage Corp (NASDAQ:MNST). All of these stocks’ market caps match PLTR’s market cap.

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As you can see these stocks had an average of 38.9 hedge funds with bullish positions and the average amount invested in these stocks was $1158 million. That figure was $1361 million in PLTR’s case. Align Technology, Inc. (NASDAQ:ALGN) is the most popular stock in this table. On the other hand TC Energy Corporation (NYSE:TRP) is the least popular one with only 22 bullish hedge fund positions. Palantir Technologies Inc. (NYSE:PLTR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PLTR is 25.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and surpassed the market again by 4.5 percentage points. Unfortunately PLTR wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); PLTR investors were disappointed as the stock returned -9% since the end of June (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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