Ray Dalio Makes Bold Moves: What You Need to Know About CrowdStrike and Palantir
When it comes to investing strategies, looking at successful investors can provide valuable insights. Take Ray Dalio, for example. He began his investing journey at age 12 with just $300 in a stock, quickly turning it into $900. Over the years, he founded Bridgewater Associates, which has grown into the world’s largest hedge fund, currently managing about $100 billion in assets.
Dalio’s Investment Philosophy
Dalio advocates for long-term investing, which means keeping stocks for several years to benefit from their natural growth. However, he also knows when to take profits. He advises selling stocks that are fully valued and reallocating those funds into stocks with more potential for appreciation.
Notably, Dalio has a history of making contrarian moves. Recently, during the third quarter, Bridgewater sold its remaining stake in cybersecurity firm CrowdStrike (NASDAQ: CRWD). Analysts predict this stock will rise in the next year. Conversely, he opened a new position in a rapidly growing AI company in the S&P 500, which has surged 300% this year, despite predictions of a 40% decline ahead. Is Dalio ahead of the curve while others are missing the signal?
Image source: Getty Images.
Details on Recent Transactions
Now let’s analyze these recent decisions. Dalio’s firm completely exited its position in CrowdStrike by selling 7,140 shares. This move came after gradually reducing its stake throughout the year. Originally, Bridgewater acquired CrowdStrike in the third quarter of 2022, and since then, the stock has appreciated by about 118%, allowing Dalio to secure profits from this investment.
In contrast, Bridgewater significantly increased its position in Palantir Technologies (NASDAQ: PLTR) by more than 500%, acquiring a total of 523,548 shares. This was an investment made earlier, in the first quarter of 2022, and the stock has since skyrocketed, showing gains of over 400% since then.
Current estimates from Wall Street suggest that CrowdStrike could see a slight increase of about 2.5% in the next year, while Palantir may face a significant decline of approximately 40%. Could Dalio’s decision to take profits on CrowdStrike and invest more in Palantir end up being a savvy move?
Challenges for CrowdStrike
It remains uncertain how these investments will pan out. CrowdStrike might experience difficulties due to a faulty software update in July, which caused a major IT outage. The company expects to incur costs for compensating affected customers, potentially hindering growth in the near future, although it remains a strong long-term investment choice.
For Palantir, while the stock’s valuation is high, currently trading at 184 times estimated forward earnings, some investors, including Dalio, may still see value. This is largely due to Palantir’s position in the emerging AI market, which continues to gather momentum.
Growing Demand for Palantir’s AIP
Palantir launched its Artificial Intelligence Platform (AIP) a year ago, and demand for this product is increasing rapidly. Currently, with about 300 commercial clients in the U.S., the company has significant growth potential ahead. Moreover, with forecasts predicting the AI market to expand from $200 billion today to $1 trillion by the end of the decade, Palantir looks well-positioned for future success. Its recent earnings also reflect this optimism, reporting record profits in the third quarter.
This context suggests that Dalio’s strategy might be sound by investing further in a promising AI company, despite less favorable short-term forecasts from Wall Street. It’s crucial to remember that long-term investing often entails holding onto an asset for five to ten years or even longer, making it possible for a still-recent investment to become a successful one over time.
Should You Consider Investing in Palantir Technologies?
Before deciding to invest in Palantir Technologies, it’s worth noting:
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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike and Palantir Technologies. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
