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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 887 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of December 31st, 2020. In this article we are going to take a look at smart money sentiment towards Palantir Technologies Inc. (NYSE:PLTR).
Is Palantir (PLTR) stock a buy or sell? Hedge funds were taking a bullish view. The number of long hedge fund positions improved by 7 in recent months. Palantir Technologies Inc. (NYSE:PLTR) was in 38 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PLTR isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 31 hedge funds in our database with PLTR holdings at the end of September.
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 124 percentage points since March 2017 (see the details here).
John Griffin of Blue Ridge Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 website. Keeping this in mind let's analyze the recent hedge fund action regarding Palantir Technologies Inc. (NYSE:PLTR).
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 this stock, a change of 23% 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. So, let's review which hedge funds were among the top 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 reported holding $687.7 million worth of stock at the end of December. It was followed by Soros Fund Management with a $434.7 million position. Other investors bullish on 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 allocated the biggest weight to Palantir Technologies Inc. (NYSE:PLTR), around 100% of its 13F portfolio. 72 Investment Holdings is also relatively very bullish on the stock, designating 92.67 percent of its 13F equity portfolio to PLTR.
Now, key money managers have jumped into Palantir Technologies Inc. (NYSE:PLTR) headfirst. 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 made a $215.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Robert M. P. Luciano's VGI Partners, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and Ken Griffin's Citadel Investment Group.
Let's go over 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 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 L.P. (NYSE:EPD), and ConocoPhillips (NYSE:COP). All of these stocks' market caps are similar to PLTR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in 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]
View table here if you experience 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 $2000 million. That figure was $1903 million in PLTR's case. Twitter Inc (NYSE:TWTR) is the most popular stock in this table. On the other hand TAL Education Group (NYSE:TAL) is the least popular one with only 29 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 49.2. 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 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 19th and surpassed the market again by 0.8 percentage points. Unfortunately PLTR wasn't nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); PLTR investors were disappointed as the stock returned 3.3% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.