Palantir Mistakes From a 140% Gain
Principles to better deal with Palantir
Editor: Emanuele Marabella
Hi, I’m Arny. Thank you for joining 3.324 investors. Please hit the ❤️ button if you enjoy today’s article.
My $PLTR shares are up +140%. This could be seen as a wild success, yet the reality is that I made some crucial mistakes that a wise investor should avoid.
Last year I shared an article underscoring 3 mistakes I made with Palantir in 2022. In a similar line, with this article, I wish to guide you through the principles I learned this year.
Avoiding or minimizing mistakes is the key to generate better returns.
These principles are worth considering with any stock but become particularly relevant when dealing with a volatile stock like Palantir.
Don’t be greedy in fear
This time last year I was at ~80% Palantir at an average of $8 and ~20% cash.
I was seeking to deploy this cash in the case of Palantir reaching a $5 price, which was my "YOLO price,” as I described in my playbook.
Palantir reached $5.94.
I wanted $5.50.
Palantir never saw the $5 again.
This miss "cost" me ~200% return on that cash I should have deployed if I were not greedy on those $0.45.
Cents don't matter in an outstanding deal.
Don’t be fearful in greed
In May, my PLTR shares went up almost 40% in May.
Given the overweight, I became scared it would go down again as it did twice in the previous months.
Therefore, I reduced Palantir to ~50% of the portfolio at $11. Palantir kept rising to $20 as of today. The sale of this 30% implicitly "cost" me 81% return on those shares as of today.
Finding a winner is hard, but a winner needs to run to keep winning.
Let your winner win.
Palantir’s business model used to require substantial upfront work in terms of pilots to obtain the initial contracts. These contracts required 1-2 years before they saw substantial expansion.
As of the DPO, I tended to underestimate how “slow” this process was, I failed to fully realize how Palantir’s ability to develop new products on top of their own Foundry architecture could potentially disrupt its own business.
As a consequence, in 2023 I underestimated how fast PLTR could "switch" its go-to-market and numbers with its new product AIP.
Even after 3 years of maniacal study of a company you could be surprised.
Keep studying to adjust your mental models.
Realizing past mistakes is a matter of survival for investors.
In the same way, Palantir’s Ontology writes back information to improve future decisions, we need to be aware of mistakes to sharpen our own judgment.
With more awareness, we can better solve crucial investing questions. I hope this article will make you better investors.
“It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.” - Warren Buffett
Disclaimer: The views and opinions expressed above are current as of the date of this document and are subject to change without notice. Materials referenced above will be provided for educational purposes only. None of the above will include investment advice, a recommendation or an offer to sell, or a solicitation of an offer to buy, any securities or investment products.