- Ark Investment Management fully exited its Palantir Technologies (PLTR) position in March.
- Cathie Wood’s firm held more than 30 million shares in early February.
- The portfolio manager’s exit should not influence your decision about the company.
It’s been a couple of weeks since star portfolio manager Cathie Wood fully unwound her company’s position in big data analytics firm Palantir Technologies (NYSE:PLTR). The move has done little to hurt PLTR stock.
It always amuses me when the business media freak out because some big shot is selling a large number of shares in a particular company. In this instance, Benzinga reported on March 10 that Wood took her holdings in Palantir from well over 30 million shares in February down to zero in approximately 13 trades.
I say this all the time. Investors of every description sell for many reasons. They buy for one.
If you own Palantir, do not let Wood’s decision affect your view of the company. In the end, you could be right, and she could be wrong. It happens more often than you think.
Trust your gut. Do not listen to others. That includes me. Here’s why.
| PLTR | Palantir Technologies | $12.89 |
PLTR Stock Was Less Than 3% of Ark Invest Assets
Wood’s biggest exchange traded fund (ETF) by assets is the ARK Innovation ETF (NYSEARCA:ARKK). It has a turnover rate of 71%. That’s not high by active standards, but it’s high enough. Stocks are going to get sacrificed in the name of better returns. Clearly, Wood felt there was a better place for the estimated $360 million ($12 x 30 million shares).
ARKK currently has $12.48 billion in total net assets. That means PLTR accounted for 2.9% of the ETF’s portfolio. So if Wood still held, it would be the 15th largest position. But, of course, we know that some of Wood’s other ETFs held Palantir stock, so it held an even less critical role within Ark Invest.
According to WhaleWisdom, Ark Invest held 35.3 million shares worth $642.5 million at the end of the fourth quarter. They accounted for 1.95% of the $33.1 billion listed on its latest 13F filing.
If Wood sold her entire position in Tesla (NASDAQ:TSLA), that would be an entirely different situation. Ark Invest has held TSLA since the fourth quarter of 2016. That’s more than 60 months ago or so. Palantir only became a public company 19 months ago. The level of commitment is entirely different.
The Proper Course of Action
My InvestorPlace colleague, Larry Ramer, recently said the following about Wood’s departure from Palantir:
[F]unds managed by Cathie Wood, who for over a year was by far the most visible cheerleader for the company, have sold all of their PLTR stock. When a stock’s most famous bull throws in the towel on it, most investors are not going to want to own the shares for a long time
Listen, Wood might have been vocal in her support for Palantir, but that’s her schtick. She gets out in front to support the stocks that she owns. I have no problem with cheerleading. She’s done a great job of defending Tesla over the years.
However, if you think that Wood holds a candle to Peter Thiel’s commitment to Palantir — he owns almost 164 million shares — you haven’t followed the company’s story very closely.
Like Wood selling Tesla, Thiel unloading Palantir would be a big deal. But, of course, he owns so much it might take him several years to unwind profitably.
Regular retail investors should pay little attention to what billionaires and money managers are selling and focus on what they’re buying. That’s what matters.
PLTR Stock Is a Buy for Those Not Easily Influenced
I would suggest that Palantir is not a stock you should own if you are influenced by what Cathie Wood is selling. She’s irrelevant to your investment decision.
Instead, it would be best if you were asking yourself why you bought it in the first place. If your thoughts about the company aren’t much different from when you first acquired its shares, you shouldn’t worry about what Cathie Wood is doing. Her interests are entirely different from yours.
In my last article about Palantir, I said that Palantir was an excellent long-term buy in the teens. It’s dropped 29 cents in the six weeks since. I don’t believe anything has changed about its business. Its sales are growing, but it needs to scale to profitability. I think it will.
Maybe Cathie Wood doesn’t and that’s why she sold. I couldn’t care less.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
