Friday, September 3, 2021

Palantir (PLTR) - A network of Palantir contracts

Palantir is by far my most favorite stock. I understand what they do. I knew of them before they IPO’d and as soon as they did, I bought. It was the single largest individual stock buy. I saw it dip and sputter leading to a lot of chatter on the internet. It even made to a meme stock status. Then finally, I saw it soar and find its footing to where its at today. My conviction is solid and I am not going to share a single share for next 20 years.

Palantir works with data. Many industries and sectors generate a ton of data. Palantir helps to understand the data. It works with the information to identify pain points and improve processes. This virtuous cycle, helps tweak the process which in turn produces more data. This is improving many of the issues that plague our industries and economies today. Palantir solves problems. Period. Which is why I have such high conviction of the company.

The next was for me to analyze what kind of contracts does Palantir have and how they may inform of its operations. Figure depicts the Network graph of Palantir contracts. 

A network representation of Palantir and its businesses (click on the image to zoom)

As discussed before, the graphs has nodes and lines connecting the nodes, called edges. A node is a tangible concept and the edges depict relationships between them. These graphs are a mathematical model of relationships. Mathematical algorithms calculate the specific position of the nodes. This calculation dependent on relationships between the nodes. The network is thus unsupervised.  This means, I did not choose the position of the nodes. The data (relationship between the nodes) lead to placement of the nodes.

Comments:

1) Palantir has built a healthy dossier of multi-year contracts since their IPO

2) The areas are diverse and this indicates the versatility of the products. Operational analytics, data security disease surveillance which have usual clients such as governments.

3) Palantir is expanding into some surprising sectors. These include Electric grid safety, Aviation safety, Legal digital services, geo-spatial intelligence, media/journalism, automotive tech, oil and energy, and nuclear security!

4)  Their footprint is in in several countries including UK, Japan, and Greece. This includes contracts with both the governments and private sector.

5) They are working with government of USA with many agencies such as Food and drug administration (FDA), Centers for Disease Control (CDC) and US Coast guard (USCG). Additionally, US Army, National Nuclear Security Administration (NNSA), National Central for advancing translational sciences (NCATS), US air force (USAF), US space force (USSF), US special Ops Command (USSOCOM) and Program executive office for enterprise information systems (PEO EIS) also have contracts with them. They are also working with government of UK – National Health Service (NHS), Crown Commercial Service, Royal Navy. There is also a contract with Govt. of Greece.

6) I detect a pattern, where if one agency is working with them, another agency from a different country or a sister agency in the same country will then seek a contract with them. This is classical example of multiple growth from shared opportunities and land and expand.

7) For the unique single contracts (Aviation safety, Legal digital services etc), I expect, Other companies or entities in same industry will seek the expertise of Palantir. For example, It is possible that the Civil Aviation authority of UK may want what FAA is doing with Palantir. Other legal powerhouses would like to have a digital platform, so on and so forth.

8) Finally, the private sector companies are to the bottom and bottom-left where you see the clustering of the violet nodes, these co-localize with industries like energy, oil, legal, automotive, aviation etc. The Military complex and governmental contracts are clustered around top right where they co-locate with COVID efforts and around data security and analytics.

All these reasons confirm my belief that Palantir is a stock for the long hold. I will not be selling a single share for at least 20 years. It will only keep growing. The network above will become bigger as Palantir capture more contracts. It will also grow as it expands in more areas!

Disclosure: If not evident from post above, "I own shares of Palantir" 

Next: Teladoc a video visit with a doctor? think again (A network analysis of its business)