Shares of Palantir Technologies (NYSE:PLTR) gained 12% on Tuesday after the hedge fund run by legendary investor Steve Cohen disclosed a purchase of 29.9 million shares. The stock has climbed steadily since its late September debut, and Cohen's Point72 fund is apparently bullish the data analytics stock can continue to perform.
Palantir, which provides analytics for both corporate and government clients but is perhaps best known for its work with spy agencies, has been a hot stock since the beginning of November. The shares have gained 70% since the U.S. presidential election as some of the uncertainty around what the government will look like in 2021 has cleared.
Cohen apparently is optimistic about the company. In a filing, his Point72 Asset Management LP disclosed the purchase of 29.9 million shares in the last quarter.
The interest offset another high-profile investment fund that is attempting to distance itself from Palantir. Soros Fund Management said in a statement to CNN it has sold much of the 18.5 million shares it owned prior to the company going public.
Palantir is backed by Peter Thiel, a venture capitalist known for his conservative leanings, and the company has been caught up in controversies surrounding its work helping to enforce immigration policies and with helping to target drone strikes. George Soros, meanwhile, is associated with liberal causes.
Soros fund management told CNN it "does not approve of Palantir's business practices" and made the investment at a time when "the negative social consequences of big data were less understood."
The market is focused on Cohen buying in, but investors should think closely about Soros' decision to go the other way. Regardless of what one thinks about some of the controversies surrounding Palantir, for investors the concern could be that those controversies eventually limit the interest in the stock.
Palantir is more of a hybrid than a pure-play defense contractor, but the defense and government business for now at least is what is paying the bills and attracting attention. With the company now trading at more than 30 times expected full-year sales, it is an expensive stock to own no matter what it is, but for now the momentum is pushing Palantir higher.