I'm Ringing the Register on a Portion of Palantir After Major Catalyst
I've got a new plan for Palantir Technologies after another win for the good guys.
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It happened first on Friday. Just before midday, well-known Sarge name Palantir Technologies PLTR kissed our $36 target price and backed off a bit, closing at $35.50.
On Monday, our target level was taken and lost early in the session, and then taken and held just before lunch. The stock held the level for the rest of the regular session, and I have seen it trade very close to $37 overnight. Huzzah! Another win for the good guys.
If you've been with me since the days of the "Stocks Under $10 Portfolio," you're standing on what is likely a six-bagger. If you've been with me since that product came to its conclusion and I was allowed to buy it in my own accounts, then you're still up almost 2.5 times. Rock on.
Latest News
On Tuesday morning, Palantir announced a new multi-year, multi-million-dollar contract for its artificial intelligence platform (AIP) with Nebraska Medicine in order to improve the quality of healthcare in the state through "transformational technologies." In less than a year of working with Palantir, Nebraska Medicine has, so far, implemented more than 10 AIP applications, improving patient throughput, expanding claims reimbursements and managing patient care.
Palantir Technologies on Tuesday was added to Bank of America's BAC "US 1" list. This is BAC's list of best U.S. investment ideas among those the firm covers. Mariana Perez Mora, who is rated at five stars by TipRanks, covers PLTR for BAC. On Monday, she reiterated her "buy" rating and $50 target price on the stock. She raised her target price from $30 to $50 on September 10, 2024.
The Catalyst
It was about a week and half ago that we learned that Palantir Technologies would be admitted to the S&P 500 after last Friday's "triple witching" close and before Monday morning's opening bell, thus making last Friday night's sale a big deal. Palantir will enter the S&P 500 alongside Dell Technologies DELL and Erie Indemnity ERIE. Palantir will replace American Airlines AAL, which is being exiled to the S&P Mid-Cap 400, while Dell and Erie will replace Etsy ETSY and Bio-Rad Labs BIO, respectively.
I covered the story then for TheStreet Pro and described the "inclusion impact," which is described as a short-term positive move in share price that traders can take advantage of in between the announcement of a corporation being added to something along the lines of the S&P 500 and the completion of that event.
The stock then often settles down a little over the following two weeks, when all of the funds have re-balanced their portfolios, and have now purchased those added stocks and then weighting them appropriately, while also selling off deleted stocks. The chart from that piece pre-open trading that day at $32.91. The stock is up a rough 12% since.
My Plan
Long-time readers know that, unlike what you see on TV with my "trader" colleagues (quotation marks intentional), one of my long-standing rules for myself is that I must act in some way when a target price gets taken out. Now, long-term, I don't yet want to wind down my long position in PLTR. This stock is for my children, grandchildren and the generations of Guilfoyles whom I will never meet. That does not mean that I am inert and unable to use my head to try to improve my own performance.
Palantir is currently, thanks to its recent moves and my additions on dips, my fifth-largest single position in dollar terms. I will sell a token portion of that long position on Tuesday morning, ahead of Wednesday mayhem. In doing so, I will cancel my $36 target price for now.
Readers will see a reading for relative strength that warns of an overbought technical state. The daily MACD, however, remains postured quite bullishly. One might think that it is probably nearing time for PLTR to move sideways to lower and build a base of consolidation. That could come in response to the FOMC policy decision on Wednesday afternoon, or in response to all of the funds that track the S&P 500 snapping up the shares they need by mandate ahead of and into closing time this Friday.
What does that mean to me? That means I will very likely sell another token amount on Friday very near the final toll of the 4 p.m. ET bell. Selling two tokens equals the sale of a smidge, maybe more. I am currently at 135% of what I consider to be a fully-weighted position in this name. I plan to remain overweight this stock, and I plan to get the weighting back up to 135% after the fun and games end this week.
In a perfect world, these shares dip next week or the week after. Remember, the worst two weeks of the year for stocks most years tend to straddle late September and early October. When the stock dips, and it will, I will be waiting with open arms to refill my top-five weighting. Yes, trading in this way, recorded in FIFO fashion, will increase net basis. So what? This game is about creating capital... making money. Looking pretty is nice. Kicking tail is much nicer.
How good is Mora? Not just a "five star," she's one of the very best. She's ranked at TipRanks as number 160 out of 9,046 sell-side analysts. Think Dan Ives at Wedbush is really sharp? He is, but he's only a three-star analyst at TipRanks and rated at number 3,325 out of that same 9,046. Ives has a $38 target on PLTR.
At the time of publication, Guilfoyle was long PLTR equity.
