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☕ Even the most bearish analysts are suddenly rethinking Palantir

Feb 06, 2024

Good morning! 👋

Traders are coming to terms with the prospect of fewer interest rate cuts.

Excellent!

That means fewer distractions for us as investors.

Here’s my playbook.

1 – PLTR: even the most bearish analysts are rethinking things

... Citi now says $20 a share, up from $10

... Jefferies now says $22, up from $13

Imagine that, fellas.

Karpus diem!

My take on PLTR (along with NVDA and COST) a while back with the incomparable Stuart Varney. (Watch)

$50.

Keith’s Investing Tip: People fear buying stocks that have run higher but that’s really misguided. Change up your tactics to control risk as part of the buying process, not after the fact which is how most investors do it if they think about risk at all. We talk about both constantly as part of the One Bar Ahead® approach. (Learn More If You'd Like)

2 – Eli Lilly rocks earnings

The company just reported blowout numbers thanks to a strong start from its new weight loss drug, Zepbound, and higher prices from the company’s popular diabetes treatment, Mounjaro. (Read)

Weight loss drugs are a bigger, more profitable business than actually exercising.

Just ask Peloton. 🤦‍♂️

MyPOV: I make it a big point to focus on CEOs and company results, not Wall Street’s sell side analysts and encourage you to do the same thing. Why? Because the vast majority of sell side research is totally unsuitable for individual investors. The sooner you let that sink in, the sooner you can get down to business and more effective, more consistent investing.

3 – TSMC opens 2nd Japan chip factory with backing from Sony and Toyota

This is a good thing, long overdue in fact. (Read)

Here’s why I think it’ll be a dud.

Japan has struggled with legacy decision-making at the very top of its best corporations for years because executives are trapped by tradition, pride and rigid rule-making that prevents ‘em from embracing innovation.

I don’t make these comments lightly.

I’ve spent 30+ years of my life closely involved in Japan as a consultant, an analyst, and strategic advisor. I am married to a Japanese, have a home there, raised our kids there etc.

You get the idea.

Japan can talk specs, but it can’t talk concepts.

Generally speaking, the nation does not understand how it lost its once formidable global presence.

So now what?

The real winner will be TSMC, not Sony or Toyota.

4 – DocuSign: the last of the Covid trades goes south

Reports have surfaced that Bain Capital and Hellman & Friedman are no longer interested in buying the company. (Read)

I wouldn’t be either.

DocuSign is n+1, meaning an incremental improvement not a breakthrough.

Zero to 1 investments are a much better choice.

Not for nothing, but I repeatedly told investors to avoid DocuSign like the plague during Covid even as shares plowed higher, ultimately cresting at around $300 a share.

I think the stock will be lucky to hold $40 a share a year from now.

Putskies.

5 – META’s new dividend policy is not an accident

Meta is warning investors in its latest annual report that El Zucko's love for combat sports and other high-risk activities could harm the company if he were to be made unavailable as a result of doing such things.

Interesting, yes.

Significant, yes.

Unusual, no.

The warning speaks to something once called significant man risk but now referred to as key person clauses or business life insurance.

El Zucko likes to fly private planes and has a love of MMA. Richard Branson flew hot-air balloons around the world and regularly kitesurfs in the open ocean. Sergey Brin is into trapeze and springboard diving. Anne Wojcicki played hockey because figure skating was too much “like Honey Boo Boo.”

Personally, I can’t get enough of my motorcycles, love driving vintage sports cars, fly when I can and fought full-contact martial arts for years as –ahem- a much younger man.

Social scientists are beginning to draw some interesting conclusions.

95% of top CEOs were and are athletes.

Risk, interestingly, isn’t the key input.

The trade off in utility is.

What I mean by that is that execs like El Zucko, others and I love activities where we can engage in the continual tradeoff between risk and reward and the constant decision making that makes it possible.

Investing is the same thing.

People who take risks with their money for the sake of “doing something” don’t tend to last very long. On the other hand, those who understand the constant ballet between deliberate, measured analysis, proper training, focus and planning typically enjoy much more consistent long-term results.

META becoming a dividend stock is not an accident.