Billionaire Ray Dalio Increased Bridgewater's Stake in Palantir by More Than 500% and Completely Exited His Position in a Premier Media Stock

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Investors rarely have to hunt for clues about the health of corporate America during earnings season. For a period of six weeks each quarter, a majority of Wall Street's most-influential businesses lift their proverbial hoods for investors.

But what you might not realize is that one of the most important data releases of the fourth quarter occurred last week during the heart of earnings season. On Nov. 14, institutional investors with at least $100 million in assets under management (AUM) were required to file Form 13F with the Securities and Exchange Commission. A 13F is the filing that breaks down which stocks Wall Street's top money managers bought and sold in the latest quarter (in this case, the September-ended quarter).

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Silver dice that say, buy and sell, being rolled across a large digital screen displaying stock charts and volume data.
Image source: Getty Images.

While Warren Buffett at Berkshire Hathaway has Wall Street's most-faithful following, there are plenty of other billionaire money managers whose 13Fs are closely monitored. This includes Ray Dalio of Bridgewater Associates, who ended the third quarter with almost $17.7 billion in AUM.

What's particularly noteworthy about Dalio's active hedge fund is that he was the only prominent purchaser of shares of cloud-based data-mining specialist Palantir Technologies (NYSE: PLTR) in the September-ended quarter.

Dalio's Bridgewater increased its stake in Palantir by more than 500%!

Though Bridgewater opened 79 new positions and added to 260 existing stakes during the third quarter, perhaps none is going to raise more eyebrows than the 437,268 shares Dalio purchased of artificial intelligence (AI)-inspired stock Palantir Technologies. While billionaire investors have been cashing in their chips on Palantir, Dalio's fund increased its stake by 507% from the June-ended quarter.

Shares of Palantir have skyrocketed by more than 725% over the trailing-two-year period, ended Nov. 19, with four well-defined catalysts leading the charge.

To begin with, Palantir's software-as-a-service (SaaS) operating model isn't replicable at scale by any other company. Its AI-powered Gotham platform is tailored to federal governments and aids with everything from data collection to mission planning and execution. Additionally, Palantir's Foundry platform leans on AI and machine-learning capabilities to help businesses make sense of their data. Companies that have sustainable moats are often given a valuation premium on Wall Street.

Secondly, there's a level of consistency in Palantir's operating results that few other fast-growing tech stocks can deliver. Palantir is profitable on a recurring basis, and it generates significant profits and operating cash flow from the contracts it signs with the U.S. government. These contracts are often four or five years in length, leading to predictable operating results year after year.