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Hedge Funds Are Piling Into Palantir Technologies Inc. (PLTR)

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  • PLTR

In this article we will analyze whether Palantir Technologies Inc. (NYSE:PLTR) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is Palantir Technologies Inc. (NYSE:PLTR) undervalued? Money managers were becoming hopeful. The number of bullish hedge fund positions advanced by 9 in recent months. Palantir Technologies Inc. (NYSE:PLTR) was in 35 hedge funds' portfolios at the end of the third quarter of 2021. 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 Q3 rankings).

Ken Griffin of Citadel Investment Group

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we're going to review the key hedge fund action regarding Palantir Technologies Inc. (NYSE:PLTR).

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

Heading into the fourth quarter of 2021, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 35% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PLTR over the last 25 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is PLTR A Good Stock To Buy?
Is PLTR A Good Stock To Buy?

More specifically, ARK Investment Management was the largest shareholder of Palantir Technologies Inc. (NYSE:PLTR), with a stake worth $895.3 million reported as of the end of September. Trailing ARK Investment Management was Renaissance Technologies, which amassed a stake valued at $311.5 million. Citadel Investment Group, Citadel Investment Group, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Andar Capital allocated the biggest weight to Palantir Technologies Inc. (NYSE:PLTR), around 9.11% of its 13F portfolio. Crestwood Capital Management is also relatively very bullish on the stock, dishing out 6.59 percent of its 13F equity portfolio to PLTR.

With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. ThornTree Capital Partners, managed by Mark Moore, assembled the largest position in Palantir Technologies Inc. (NYSE:PLTR). ThornTree Capital Partners had $26.2 million invested in the company at the end of the quarter. Matthew Hulsizer's PEAK6 Capital Management also made a $21.9 million investment in the stock during the quarter. The following funds were also among the new PLTR investors: Joe DiMenna's ZWEIG DIMENNA PARTNERS, Kenneth Tropin's Graham Capital Management, and Michael Gelband's ExodusPoint Capital.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Palantir Technologies Inc. (NYSE:PLTR) but similarly valued. These stocks are The Kraft Heinz Company (NASDAQ:KHC), TE Connectivity Ltd. (NYSE:TEL), Carrier Global Corporation (NYSE:CARR), The Bank of New York Mellon Corporation (NYSE:BK), T. Rowe Price Group, Inc. (NASDAQ:TROW), Kimberly Clark Corporation (NYSE:KMB), and L3Harris Technologies, Inc. (NASDAQ:LHX). This group of stocks' market valuations are closest to PLTR's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KHC,33,12321504,0 TEL,41,2188058,2 CARR,46,1324758,0 BK,46,4657475,-6 TROW,35,471726,11 KMB,28,410445,-9 LHX,29,492448,-13 Average,36.9,3123773,-2.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.9 hedge funds with bullish positions and the average amount invested in these stocks was $3124 million. That figure was $1635 million in PLTR's case. Carrier Global Corporation (NYSE:CARR) is the most popular stock in this table. On the other hand Kimberly Clark Corporation (NYSE:KMB) is the least popular one with only 28 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 57.1. 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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 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 -14.1% since the end of September (through 11/30) 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.