Is Palantir (PLTR) stock a buy or a sell?

The last 13F reporting period has come and gone, and Insider Monkey is once again at the forefront when it comes to using this data gold mine. Insider Monkey has completed processing 887 13F deposits submitted by hedge funds and leading investors. These deposits show the portfolio positions of these funds as of December 31, 2020. In this article, we’ll take a look at smart money sentiment toward Palantir Technologies Inc. (NYSE: PLTR).

Is Palantir (PLTR) stock a buy or a sell? Hedge funds took a bullish view. The number of long positions in hedge funds has improved by 7 in recent months. Palantir Technologies Inc. (NYSE: PLTR) was listed in 38 hedge fund portfolios at the end of the fourth quarter of 2020. The all-time high for this statistic is 31. That means the bullish number of hedge fund positions in this stock is currently at its all-time high. Our calculations also showed that PLTR is not in the top 30 most popular stocks among hedge funds (click for Q4 ranking). There were 31 hedge funds in our database with holdings in PLTR at the end of September.

The reputation of hedge funds as savvy investors has been tarnished over the past decade, as their hedged returns could not keep up with the unhedged returns of market indices. Our research has shown that small-cap hedge fund stock picks managed to beat the market in double digits per year between 1999 and 2016, but the margin for outperformance has shrunk in recent years. Nonetheless, we were able to identify in advance a select group of hedge funds that have outperformed S&P 500 ETFs by 124 percentage points since March 2017 (see details here).

John Griffin of Blue Ridge Capital

At Insider Monkey, we leave no stone unturned when searching for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So we check this under the radar cannabis stock at present. We go through lists like the 10 best stocks of batteries to buy to identify the next stock with a 10x upside potential. Even though we only recommend positions in a tiny fraction of the companies we analyze, we check as many stocks as possible. We read letters from hedge fund investors and listen to stock market pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With that in mind, let’s take a look at the recent hedge fund action regarding Palantir Technologies Inc. (NYSE: PLTR).

The story continues

Do hedge funds think PLTR is a good stock to buy now?

At the end of the fourth quarter, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on the stock, a 23% change from the previous quarter. On the other hand, there was a total of 0 hedge funds with a bullish position in PLTR a year ago. So let’s see which hedge funds were among the main holders of the stock and which hedge funds were making big moves.

The largest stake in Palantir Technologies Inc. (NYSE: PLTR) was held by 72 Investment Holdings, which said it held $ 687.7 million in shares at the end of December. It was followed by Soros Fund Management with a position of $ 434.7 million. Other bullish investors in the company included Blue Ridge Capital, Discovery Capital Management and Anchorage Advisors. In terms of the portfolio weights assigned to each position, Blue Ridge Capital assigned the largest weighting to Palantir Technologies Inc. (NYSE: PLTR), or approximately 100% of its 13F portfolio. 72 Investment Holdings is also relatively very bullish on the stock, allocating 92.67% of its 13F stock portfolio to PLTR.

Now, the major fund managers have jumped head first into Palantir Technologies Inc. (NYSE: PLTR). 72 Investment Holdings, managed by Steve Cohen, established the largest position in Palantir Technologies Inc. (NYSE: PLTR). 72 Investment Holdings had $ 687.7 million invested in the company at the end of the quarter. John Griffin’s Blue Ridge Capital also invested $ 215.1 million in the stock during the quarter. Other funds with new equity positions are VGI Partners of Robert MP Luciano, Peter Rathjens, Bruce Clarke and Arrowstreet Capital of John Campbell, and Citadel Investment Group of Ken Griffin.

Let’s review hedge fund activity in other stocks – not necessarily in the same industry as Palantir Technologies Inc. (NYSE: PLTR) but similarly valued. We’ll be looking at Cognizant Technology Solutions Corp (NASDAQ: CTSH), Ross Stores, Inc. (NASDAQ: ROST), Twitter Inc (NYSE: TWTR), TAL Education Group (NYSE: TAL), Marriott International Inc (NASDAQ: MAR), Enterprise Products Partners LP (NYSE: EPD) and ConocoPhillips (NYSE: COP). The market capitalization of all of these stocks is similar to the market capitalization of PLTR.

[table] Ticker, Number of HF with positions, Total value of HF positions (x1000), Change of HF position CTSH, 46,3517450,1 ROST, 57,1308907,11 TWTR, 78,2777387,3 TAL, 29,1970456, -12 MAR, 58.3421401.2 EPD, 30.316886.0 COP, 49.687393.4 Average, 49.6.1999983,1.3 [/table]

Check the table here if you have formatting issues.

As you can see, these stocks had an average of 49.6 hedge funds with bullish positions and the average amount invested in these stocks was $ 2,000 million. This figure was $ 1903 million in the case of PLTR. Twitter Inc (NYSE: TWTR) is the most popular action in this table. On the other hand, TAL Education Group (NYSE: TAL) is the least popular with only 29 bullish hedge fund positions. Palantir Technologies Inc. (NYSE: PLTR) isn’t the least popular stock in this group, but hedge fund interest is still below average. Our overall hedge fund sentiment score for PLTR is 49.2. Stocks with a 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 would rather spend our time researching stocks that hedge funds are piling up on. Our calculations showed that the 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020 and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19 and again topped the market by 0.8 percentage point. Unfortunately, the PLTR was not as popular as these 30 stocks (hedge fund sentiment was rather bearish); PLTR investors were disappointed as the stock has returned 3.3% since the end of December (through 3/19) and has underperformed the market. If you want to invest in large cap stocks with huge upside potential, you should check out the 30 most popular stocks among hedge funds, as most of these stocks have already outperformed the market in 2020.

Receive real-time email alerts: Follow Palantir Technologies Inc. (NYSE: PLTR)

Disclosure: None. This article originally appeared on Insider Monkey.

Related content