You can learn a lot by watching the moves of billionaire investors. That’s because they have a proven track record of success and have built a fortune through long-term investing. You can glean ideas from their purchases and sales, with the goal of achieving your own investment wins. And the good news is that you don’t have to be a billionaire to follow in their footsteps; With even a small amount invested today, you can take steps that can put you on the path to wealth down the road.
What are billionaires doing now? You might be surprised to hear that many of them have decided to sell shares of a very well-known stock. This technology player is up triple digits this year after posting quarter-on-quarter profit increases. Despite this top performance, Philippe Laffont of Coatue Management, Ray Dalio of Bridgewater Associates, Israel Englander of Millennium Management and Jeff Yass of Susquehanna International all sold shares of the popular stock in the second quarter, according to their 13F filings. Let’s find out more – and whether you should follow their lead this time.
A 20 year old company
Which top stock am I talking about? A company that has been around for more than twenty years, but has recently been in the spotlight thanks to its position in the artificial intelligence (AI) market. And so is this player Palantir Technologies (NYSE:PLTR). The software company helps its customers collect and use all their data to improve efficiency, solve problems and even make game-changing decisions.
In the past quarter, billionaires took the following steps:
Coatue’s Laffont closed its position in Palantir, selling 4,816,195 shares.
Bridgewater’s Dalio cut his position by 19% to 86,280 shares.
Millennium’s Englander cut its position by 59% to 4,973,308 shares.
Susquehanna’s Yass cut his position by 31% to 998,191 shares.
We don’t know exactly what’s driving the investors’ moves, and even a complete exit from a position – as in the case of Coatue’s Laffont – doesn’t necessarily mean the investor no longer believes in the company’s long-term potential. . In some cases, investors may need cash to expand into other investment areas, so they can, for example, unload stocks that have had an excellent run. Laffont initially bought Palantir in the third quarter of last year, and in the last quarter of last year through the end of the first quarter of this year, the stock rose more than 40%.
More expensive than Nvidia
The idea is that a given player could be richly valued after such gains, and that could weigh on the potential for further gains, at least in the coming months. This may be the element that has pushed some billionaires to reduce or close their positions in Palantir in recent times. Following the stock’s impressive performance, it now trades at over 122 times forward earnings estimates, making it more expensive than the AI market giant. Nvidia.
PLTR PE ratio (forward) data per YCharts.
Now let’s get back to our question. Should You Follow These Billionaires and Sell Palantir Stock? This depends on your investment horizon and objectives. First, it’s important to note that even though Palantir has been around for many years, it may still be in the early days of its growth story. Originally known for its government contracts, Palantir is now starting to see tremendous growth in its commercial business as well. Both activities even achieved double-digit revenue growth last quarter.
More growth ahead?
Palantir only launched its Artificial Intelligence Platform (AIP) last year and things are off to a great start, even helping the company post its biggest quarterly profit ever in the most recent quarter. All of this suggests that Palantir could achieve significantly more growth in the coming quarters.
Of course, this story won’t unfold overnight, and since stocks aren’t rising non-stop, stocks may be taking a break from the stellar performance of the past few months. This means that if you have made a big profit and need the money to expand into other stocks, you, like the billionaires, can consider selling some shares. Or if you have been holding Palantir for a long time and are interested in exploring other investment opportunities today, you can also reduce your position.
But, as mentioned above, Palantir could deliver another huge wave of gains over time, meaning now is a good time for long-term investors to stick with this top tech player.
Should You Invest $1,000 in Palantir Technologies Now?
Consider the following before purchasing shares in Palantir Technologies:
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Adria Cimino has no positions in the stocks mentioned. The Motley Fool holds and recommends positions in Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.
Billionaires Decide to Sell Shares of This Well-Known Stock was originally published by The Motley Fool
