Is Palantir Technologies Inc. (PLTR) A Good Stock To Buy?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Palantir Technologies Inc. (NYSE:PLTR)?

Is PLTR a good stock to buy now? Money managers were turning less bullish. The number of long hedge fund bets decreased by 6 lately. Palantir Technologies Inc. (NYSE:PLTR) was in 32 hedge funds’ portfolios at the end of March. The all time high for this statistic is 38. Our calculations also showed that PLTR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Stan Druckenmiller DUQUESNE CAPITAL

Stanley Druckenmiller of Duquesne Capital

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. With all of this in mind we’re going to check out the new hedge fund action regarding Palantir Technologies Inc. (NYSE:PLTR).

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

At Q1’s end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -16% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in PLTR a year ago. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, ARK Investment Management, managed by Catherine D. Wood, holds the biggest position in Palantir Technologies Inc. (NYSE:PLTR). ARK Investment Management has a $434 million position in the stock, comprising 0.9% of its 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which holds a $296.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions include Stanley Druckenmiller’s Duquesne Capital, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Andar Capital allocated the biggest weight to Palantir Technologies Inc. (NYSE:PLTR), around 9.21% of its 13F portfolio. Crestwood Capital Management is also relatively very bullish on the stock, designating 6.49 percent of its 13F equity portfolio to PLTR.

Seeing as Palantir Technologies Inc. (NYSE:PLTR) has faced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there were a few hedgies that elected to cut their positions entirely last quarter. Intriguingly, Steve Cohen’s 72 Investment Holdings dumped the biggest position of the “upper crust” of funds watched by Insider Monkey, valued at close to $687.7 million in stock. George Soros’s fund, Soros Fund Management, also sold off its stock, about $434.7 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 6 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Palantir Technologies Inc. (NYSE:PLTR). We will take a look at EOG Resources Inc (NYSE:EOG), Roper Technologies Inc. (NYSE:ROP), DoorDash, Inc. (NYSE:DASH), American Electric Power Company, Inc. (NASDAQ:AEP), National Grid plc (NYSE:NGG), Roku, Inc. (NASDAQ:ROKU), and IDEXX Laboratories, Inc. (NASDAQ:IDXX). All of these stocks’ market caps match PLTR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EOG 30 596119 -15
ROP 42 1497344 2
DASH 38 4774544 0
AEP 32 809288 0
NGG 9 331590 4
ROKU 63 3781353 3
IDXX 49 2851712 3
Average 37.6 2091707 -0.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.6 hedge funds with bullish positions and the average amount invested in these stocks was $2092 million. That figure was $1147 million in PLTR’s case. Roku, Inc. (NASDAQ:ROKU) is the most popular stock in this table. On the other hand National Grid plc (NYSE:NGG) is the least popular one with only 9 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 45.6. 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 22.8% in 2021 through July 2nd and surpassed the market again by 6 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 4.9% since the end of March (through 7/2) 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.