Palantir when no one is around you i don't remember the lyrics. I was was like if you guessed. Which song that was despite the cringe comment below. I it um anybody can guess because i'm so out of tune and no ability to sing.

But let's see if somebody can guess it so in this video. It's gonna be non edited absolutely raw. I'm gonna be coming in hot so you better prepare so i want to talk about valentir and specifically about some comments. I've been getting from people asking or questioning fairly it's a legitimate question.

Well tom you haven't made a video about palindrome in a minute are you still bullish about palantir are you by any chance trying to distance yourself from this company with how bad the stock price has been performing right and it's a legitimate question. I get it i used to make a lot of volunteer videos. But before i answer this question let me explain something to you look. I'm not about to post pilot theory videos.

Every single day. Even though financially. This would be the smart decision if i make volunteer videos every single day. I'm going to make a lot of money because this is going to get views every time.

I speak about valentine people want to listen that's just facts. It's not me you know writing my own d. It's just the way it is also i'm not a palanteer daily channel. There are other channels that do that pretty spectacularly in my opinion in fact i watch amit's channel every single day he does daily volunteer content.

I just i see no added value for me to do daily palette content he's doing a terrific job go check out his channel by the way. It's phenomenal. So i'm not about to just make palette videos just to make money if there's something interesting going on i'll report about it or i'll make a video about it. But other than that not but if there are questions from the community that want to hear where my position is and what do i think about the company right now and you need an update that's a fair question.

And it deserves a video. So here it is over the past 90 days. I have not lost faith in volunteer in fact i have literally doubled my position. I have doubled my position over the past 90 days for the following reasons and i'll explain it in a second now look in times of crisis in times of a bear market.

I applied the following strategy and it's a three prong strategy and the strategy is dollar cost average long term into good companies and hold on to your ball sack. And don't get rattle for the next three to four to five years don't sell even if it seems like really really bad just hold on to it the reason. This strategy works long term and i'm saying you have to have a five year horizon for the strategy to make sense is because it absolutely takes away your stock picking skills out of the game. Which i don't think i have to be honest.

I'm not a good stock picker. I mean i'm a good um macro guy. I can analyze businesses. I can do valuations.

I think i have a good business understanding. But as far as short term stock picking medium term stock picking within the next six months or to a year. It's really not my thing and you can look at my track record and you can see it's not been so good. That's not where i'm at i'm much more in the three to five year horizon.

So in the three to five year horizon actual fundamental valuations of companies based on you know actual fundamentals such as pricing power margins business. Tam cash positions balance sheet free cash flow. All that stuff actually start to make sense the longer you stay in the stock. So as a short term stock picker that's not my thing so this strategy makes a lot of sense for me now here's the actual interesting part here in times of crisis in the bear market that is inflationary driven which means it's not a subprime mortgage crash it's not the dot com bubble it's not some war et cetera it's not a pandemic when it's an inflationary crisis.

It has a specific element. Which gets added on on top of that which is well in inflationary times. What's going to happen well what happens in efficient times. Is your entire supply chain becomes more expensive by definition the goods you use to produce your product your employees energy costs.

Commodities cost everything becomes works more expensive and then you're faced with a choice as the company who sells a product or service. You have to decide whether you want to take it up to a zoo or you want to roll. It over to your clients. And it's a fictional choice because it's not really yours and here's the crazy part.

It's not you who's making the choice. It's how good your is if you have something that people absolutely want it's non discretionary and you don't have a lot of competitors you get to set your own price pretty much and you have that choice. If you're providing commodity. Which anybody can get anywhere else you raising prices and trying to roll over the inflationary cost onto your clients is going to end up with you losing a lot of business.

A lot of sales. So it's not your decision. So the question. The first question you have to ask yourself well does pilot have that pricing power to roll over the extra inflationary cost to its clients now again.

I'm not a computer scientist. I'm not an ai guy. I don't understand bi ai. All that stuff.

I'm a numbers guy specifically i look at balance sheet. I look at income statements and they talk to me they literally do and what they're saying about valencia is something very simple they're saying the following look. If this company has 124 percent net retention that means that the clients in the previous year are spending. 24.

More than they spent the previous year that means that the product that they have the service that they have people want to buy more of it's not the best net door retention in the market. Some companies like snowflake for example have a much bigger one but for a non commoditized product. Such as palantir such a very uniquely positioned product 124. Percent.

Is pretty damn good now on top of that. If you add the fact that the average spend for the top 20 clients for pilot here on average per client is 45 million dollars. Now let me explain something to you people are not about to spend 45 million dollars per year on something that is discretionary. There is no discretionary product or service.

That's cost 45 million dollars per year. Let's be clear about that so if their client is paying 45 million a year and it's 25 more than they spent in the previous year that means that the product ain't discretionary. It's not it's an expensive non discretionary power. The clients are spending 25.

More per year on the both in the net retention and the top 20 clients. Which is kind of similar. If you think about it so my conclusion based on the numbers is volunteer have some unique that people want to pay a lot of money for and it doesn't seem to be that discretionary now there are other companies that have non discretionary products. But let's just stick with politics.

Because i think they have the complete package because pricing. Power is not the end of all there's other things that look at beyond just the pricing power. Which obviously they have the other thing. I want they can look at is how much money the company spends to operate.

I want to make sure that they don't need a lot of capital in case. The interest rates go up the capital becomes more expensive harder to get. Which is exactly what's going on right now. I'm not going to say a credit crunch because this is like a curse word right now.

But when you know markets become tighter. The fed is sucking out the money of the market markets becoming tighter there's less money to go around so the question is how much money you have on your balance sheet. And how much money you need so for example. If you're an airline an infrastructure pro company construction company you're burning a lot of cash to operate that's a problem in this environment.

That's not something you want to have and with palleteer. They kind of have the both of w. Worlds set up. Perfectly so they're sitting on 23.

Billion dollars of cash 200 million of. Debt which means they're like. 23 million net of debt in cash so 23. Billion net of that cash with a company that's a free cash flow positive about 25.

Which means after paying taxes they still have 25 cents on the dollar and that's kind of the narrative that people tend to uh stick to our quality is not profitable. No my god they're making 25 cents on the dollar operationally after taxes. That's pretty good not to mention 80 percent. The gross profit.

But again gross profit is not the thing for sas companies gross profit is is just a service. It's meaningless. Where you want to look at with sas companies. Is operation expenses.

Now. Here's the thing palantir in 2018. Made um. Roughly around 600 million dollars in.

Revenue trailing 12. Months they have tripled that almost. Tripled it they 28. Times.

More you know how much it cost them on the operational expenses to triple the revenues. I'm going to let you guess okay you guessed 60. So 3x revenues took them 60 more operational expenses that sounds like a very scalable business. So the company is making money it's free cash flow positive by.

25 they're sitting on a pile of cash 23. Billion. They're not burning through cash. They're seeing a lot of cash and they don't need anything to provide their service.

They literally have to turn on the computer. And and just operate. The software. They have zero exposure to gasoline prices energy prices zero exposure to any sort of commodity prices.

Because they're not they're not kellogg's they're not making food. They're not delivering anything so no exposure to commodity prices. No exposure to energy prices to an extent and mostly. They're probably.

The only company in the world. That is um positively correlated to geopolitical myths. Now the world is going to i don't know if you notice this but i mean russia ukraine sri lanka netherlands. I mean we can go on all day.

The world is really going to this chaotic place right now everything is going to most companies don't like that because it with the supply chain with the regular order of things with how the intricate systems of the supply chains in the world work. But if there's one company in the world that absolutely thrives in time of crisis in the time of chaos. This is politics is literally the service they provide help you navigate through new and uncharted territories. When things go to so if i combine all that it makes absolutely a no brainer for me to buy more and that's why i doubled.

My position now i'm going to say this right now and i want to be very clear. This is not just a disclaimer. I'm not giving you financial advice don't buy palantir because i buy volunteer. Don't buy a panty because i'm saying so take what i'm saying and go research.

This thing for yourself find out if you have any desire interest and and ability to invest in it i'm just sharing with you my opinion. Which of course might be an accurate might be wrong might be the realities of a government you know you know the drill right so as always you know don't click nothing don't smash nothing don't buy nothing i'll see you in the next video hope that helps you understand what's going on with palantir shout out to the palette community. I'll see you all later on in my podcast with amit shout out.