Cathie Wood.
Reed Young/ARK Invest
Fund company ARK Invest, led by the well known portfolio manager and stock picker Cathie Wood, loaded up on Palantir Technologies shares after the analytics software company posted strong quarterly financial results.
Early Thursday, Palantir reported June quarter revenue of $376 million, up 49% from a year ago, beating both the company’s own target and the Wall Street consensus by large margins. Its earnings, at 4 cents a share, were a penny better than estimated.
The strong results were driven by accelerating growth in the company’s U.S. commercial business, including newly acquired clients such as Deere, BNY Mellon, and Southern California Edison.
Palantir stock jumped 15% Thursday, rising to nearly 9% above where it started the year. The stock was down about 5% in 2021 through Wednesday’s close.
On Thursday, ARK bought a total of 5.6 million Palantir shares across all six of its actively managed exchange-traded funds, according to data the company releases on its daily trades. Those shares were worth $139 million based on the stock’s Thursday closing price.
The $23 billion ARK Innovation ETF (ARKK) and the $6 billion ARK Next Generation Internet ETF (ARKW) now have weightings of more than 2% in Palantir. ARK’s other four active ETFs added the company to their portfolios for the first time since the stock went public in September 2020.
ARK declined to comment about its trades.
Palantir, based in Denver, was co-founded by billionaire entrepreneur and venture capitalist Peter Thiel. Since its IPO last year, the stock has been rangebound because analysts’ views on the growth outlook are divided. The June quarter’s strong earnings appear to have bolstered investors’ confidence.
Wood’s recent purchases could be another bullish sign for the stock. She became famous as a star fund manager last year thanks to spectacular performances by some of her active ETFs. Several were among the year’s best-performing funds, with returns of more than 100%.
This year, though, the funds have struggled. Interest rates have risen—a headwind for growth stocks such as those Wood buys. Higher rates reduce the current value of the cash companies will generate in the future, and many growth companies are expected to deliver their best performances years from now.
So-called short interest on the flagship ARK Innovation ETF recently reached a record high, meaning more investors are betting that its price will fall.
Wood has stuck to her guns, continuing to buy stock in companies she believes will grow tremendously in the next seven to 10 years. On the list are the cryptocurrency exchange Coinbase Global (COIN) and Robinhood Markets (HOOD), the stock-trading platform.
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