Uncovering Hidden Gems: What Billionaire Investors Are Buying and Selling
As we dive into the midst of earnings season, investors are flooded with a deluge of data. Amidst the chaos, it’s easy to overlook crucial insights. One such gem was hidden in plain sight on August 14, when institutional investors filed their Form 13F with the Securities and Exchange Commission. This quarterly snapshot reveals the investment strategies of Wall Street’s brightest minds, including billionaire Philippe Laffont of Coatue Management.
A Closer Look at Coatue’s Portfolio
Laffont’s hedge fund, focused on game-changing tech stocks, boasts an impressive $25.7 billion in assets under management spread across 74 holdings. What’s striking is that Coatue significantly reduced its stake in Palantir Technologies, one of Wall Street’s hottest artificial intelligence (AI) stocks. In fact, the 4,816,195 shares sold marked one of the largest share sales of Palantir stock during the June-ended quarter.
Profit-Taking and Valuation Concerns
So, why did Laffont and his team choose to cash out on Palantir? Profit-taking is a likely reason, given Palantir’s triple-digit gain since Coatue initially invested in the first quarter of 2023. Additionally, Laffont may have been wary of Palantir’s premium valuation, with its stock trading at almost 100 times forward-year earnings and 29 times forward-year sales. These multiples are hard to justify, even considering Palantir’s irreplaceable AI-driven Gotham platform and enterprise-focused Foundry platform.
The AI Bubble: A Cause for Concern?
Another possible reason for Coatue’s sale is the looming threat of an AI bubble. History suggests that new innovations often lead to overestimation and eventual disappointment. If the AI bubble were to burst, Palantir’s valuation would likely suffer.
NextEra Energy: A Growth Stock in a Slow-Growing Sector
While Coatue was busy selling Palantir, they were actively buying into America’s leading electric utility, NextEra Energy. Laffont’s fund acquired 282,544 additional shares, increasing its stake by 36% in just three months. NextEra Energy stands out in the traditionally slow-growing utility sector, delivering consistent high-single-digit earnings growth for over a decade.
Renewable Energy: The Key to NextEra’s Success
NextEra’s focus on renewable energy has been a game-changer. With plans to invest $85 billion to $95 billion in American infrastructure between 2022 and 2025, the company has reduced its electricity generation costs and boosted its bottom line and dividends. As the world shifts towards cleaner energy, NextEra is poised to lead the charge.
A Regulated Utility with a Twist
NextEra’s traditional electric utility operations, via Florida Power & Light, are regulated by the Florida Public Service Commission. This ensures predictable cash flow and no exposure to wholesale electricity pricing. Combine this with NextEra’s renewable energy focus, and you have a unique growth stock that defies its sector’s slow-growth reputation.
Before You Buy Palantir, Consider This…
As you weigh your investment options, remember that Coatue’s sale of Palantir and purchase of NextEra Energy may be more than just a coincidence. Perhaps it’s time to rethink your portfolio and explore alternative growth opportunities.
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