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Hello everyone, welcome back to the channel. If you're watching this video and you're a Pounder shareholder and have been in the market for a while, this is going to be a very rewarding video. And the reason I say this is because if you're new to Palanteer, you might not find this video as interesting, exciting, or rewarding.
But if you've been on Palanteer at least before February 2022, you probably remember one of the most famous people on Wall Street who, whether you like it or not, is always in the headlines, getting clicks, and everyone cares about what she does: Kathy Wood. He bought 37 million shares of Palunteer throughout 2021.
And in February 2022, he liquidated the 37 million shares. It was pretty tough for many Pounder bulls because, whether we care about what Kathy thinks or not, whether we like it or not, it still stings a little, doesn't it? Because Kathy is one of those big names on Wall Street. Palanteer sold off around $12, dropped to $6 about eight months later, and then, obviously, in 2023 it had its big rally to reach $ 20 at one point, currently in the $14 range.
Now, Kathy Wood bought back after their first quarter 2023 results , when they reported that they had achieved a gap return. That's when they rose from around $742 in May to around $9, and that's when Kathy Wood reacquired Poundier. And she started buying here and there, excited about the company, thinking that maybe there was a change, maybe there was a difference.
Many of us Poundier shareholders were thinking, "Really? Gap yield? For a growth stock investor who doesn't care about yield, was gap yield really what changed your mind?" . And for the past two months, we haven't heard a single word or a single peep from Kathy or the ARC team about why they've returned to Palanteer until today.
Kathy Wood's team just did a webinar podcast about Ark. And in that Arc webinar, they talked for 4 minutes about why they sold Palunteer. We finally have a clearer understanding of why they sold Palunteer. They mentioned it a long time ago, but only in passing. Why they returned to Palier and why they are excited about the future of Poundier.
So, in these four minutes, I want to thank Ahad on Twitter for sending me this. Well, look, as a Poundier shareholder who's been here a couple of years, it's been very, very rewarding to hear why you're interested and why you're not. I'm not saying Kathy is the ultimate solution. I know a lot of people have opinions about it, but just listening to how they talk about the future of Palanteer, where they see the trajectory going, why they think many of the things Palanteer has been building over the last two years will be crucial for them to capitalize on the AI opportunity, which, by the way, ARC believes will result in GDP growth of $80 trillion or something like that over the next 10 years.
I don't know if that's going to happen, but they're very optimistic about AI. It was great to see him. So, before we get into the details, let me show you what happened yesterday. The latest news was that Kathy Wood bought 129,332 shares of Pounder in the ARK, ARF, and ARCW ETFs. Pounder fell 5.73% on the day, closing at 1390.
Right now , in pre-market trading, I'm recording this at about 4:38 a.m. m. It's back in the $ 14, 1410 range. Paler 744,000 shares in the ARC KKK fund. And then we have 150,000 shares in the ARC fund. And then we have 134,000 shares in the ARC W fund. So Kathy Wood bought the dip. I had a feeling I was going to buy Palanteer.
And the fact that they bought a million shares of this bad boy, basically spending close to $14 million, a little more than that yesterday just on one ticker, they are definitely starting to develop a much larger position in the company and prepare for it as it progresses through its trajectory and life cycle.
Okay, here you go. Here's four minutes of the ARC team talking about why they reinvested in Palunteer, and this is for you, Frank. What do you think of Palunteer, a name we frequently receive questions about ? Yes, thank you, Thomas. I'm happy to shed some more light on this. Well, investors may have noticed that we moved away from Palunteer after learning that the government was backing away from the so-called Soul Source contracts.
When Palanteer first came onto the market , they were really the only option for some of the modern operating systems with databases that the government was looking for. So they won these Soul Source contracts which gave them a privileged position and accelerated agreements in the government sphere.
Out of fear of becoming overly dependent on a single supplier, the government has been cautious about continuing with those Soul Source contracts. And that made us cautious with the name. But we stayed in touch and continued to monitor the situation, and we believe that some of those fears surrounding Soul Source contracts are diminishing.
In particular, we have heard anecdotes that the commanders in charge who are actually using Palunteer's software products understand their value proposition and know that they are still quite differentiated. And we also like the direction the company is taking in this environment where they are increasingly offering products and services for newer technology companies to build on Palunteer and almost use Palunteer as a service to fulfill government contracts.
Therefore, we believe that minimizes the risk of the opportunity there. The second part, and this is the most important thing, I think is that we believe they are really well prepared to take advantage of the generative AI opportunity . And this comes from a variety of products they have been developing over the years that really seem to be laying the groundwork for implementing AI at scale within a company.
Foundry is one of those, for example, that seeks to connect the different data stores within a company and the different systems, categorized in what is called an ontology, both the nature of that data and the way in which they interact in the different workflows of an organization. And the ability to obtain a kind of panoramic view, a digital twin top-down view of an organization, its data, and its processes, and use that view to create automations that can not only analyze data and generate information, but also take action based on that information.
And that framework turns out to be exactly what you need, that scaffolding to connect something like a large language model to a workflow to enable the automation of steps that perhaps could not have been automated before, or to increase accuracy or speed up certain existing processes. Well, they've been quick to market and launch what they call AIP, their AI platform, which is based on this ontology concept to create use cases that really generate value quickly for some of their customers, creating chatbots that handle customer service requests in a matter of weeks, and which customers are finding to be of great value.
These are some of the reasons why we've become more constructive with the name and why you'll see it in wallets like ARK, Arkw, and Arkf. And the last thing I'd like to highlight is that we also recently recorded a podcast with Palunteer's Chief Technology Officer, Sean Soner, discussing all of this, their AI positioning, and their ideas for the future in much more detail.
It will be released on Thursday, September 28th. Therefore, I would definitely recommend any listener who wants to know more about what Palanteer does to tune in to that podcast. Yes, if I could add anything, Frank and I did the podcast together and it was excellent. It added new dimensions to my understanding of Palunteer and AI in general.
Therefore, I highly recommend it. In fact, when I listened to this before making the video, I did n't hear that little bit of the last 10 seconds of Kathy. I didn't even know I was in this webinar. I only heard a fragment from one of the people on our team. So, there are many interesting things there.
Okay, let me address the last thing they said quickly and we'll get to the beginning. Chief Technology Officer Sham Sanker is doing an interview with ARC with Kathy Wood. It is very interesting that it will be published on September 28th. On September 20th, we are supposed to find out if they have reached an agreement with the NHS, which is about 6 days away.
Don't know. I'm not the biggest expert on government procurement and whether these agreements actually match the timelines they publish on their website. They said they'd announce it on the 28th. Will we get it on the 28th? I have no idea, but we'll have this new podcast on the 28th. So it would be great if we get the agreement with the NHS and a podcast on the 28th and we'll see what happens.
But that would be great. Sean Sanker, chief technology officer of Palanteer, gives Kathy Wood a deeper understanding of AI. And look, Kathy studies this space. You may agree with her or not, but she has studied it extensively and has billions of dollars of trust backing up her knowledge of AI. Therefore, it is interesting that Sham Sanker has been able to further develop his conviction.
And look, now that Sham has done an interview with Kathy and they've met and talked, and this is the second rodeo he's had with Palanteer, I think it's less likely that he'll sell Palanteer. Unless you know that the thesis is broken, but it's more likely that the thesis is getting deeper and deeper and that she's starting to really understand the company on a broader level.
Okay, in response to what was said above, they left because of the hiring of Soul Source. So, single-source procurement versus single-source procurement in government is basically: single-source means there are multiple competitors, right? So you can choose this single source or that single source or that single source for the contract.
Soul Source is that there are no competitors; It's just you. You are the only source that can request a contract. He won three contracts in June 2023, Soul Source contracts, worth approximately $118 million. However, in 2022, ARC felt that much of the government was becoming a multi-vendor institution and, as a result, they were not going to buy Palanteer, and that was the main reason they were sold.
And even Brett Winton, ARC's chief futurist, went on the Meet Kevin show and said that's the main disagreement they have with Palanteer's thesis right now: if government revenue dries up, which at that time was 60% of revenue because the government wants different providers, then it would be very bad for Palanteer's growth curve and a major obstacle to their ability to cover up.
What they are learning now is that Palter not only has a competitive advantage and differentiates itself in the government sphere, but they have spoken with commanders and generals who use the software and have heard anecdotes that have reaffirmed why they use it, how they use it, and to what extent they believe it differs from other types of software.
And I think that has given them the idea that, even if the government decides to be an institution with more suppliers and sources when acquiring software, Palanteer is likely to top the list. What they are doing in the field of AI will give them a really competitive opportunity to win many of these contracts.
And at the end of the day, if the people on the front lines use your software and tell the investor that this is all we use, that this is all we want to use, we really don't see the need for anything else. Well, it makes you wonder if we really believe there's a massive competitive wave coming from private startups and other public companies that are actually going to have lunch in the government space.
And if that's not going to happen , then the thesis for government seems like it's only going to grow and improve as the government chooses to modernize and defense spending chooses to delve deeper into software to compete with China and Russia when it comes to AI, which is what Alex Karp has been talking about for a long time.
So I think that part makes a lot of sense, and at least we have some more clarity on why they sold out in 2022. It's not the worst reason, but it makes sense why they're coming back and why their thesis has been reaffirmed given these anecdotes from people using the software. The second thing they talked about was FedStart.
So when they mentioned products and services that people will be able to use, the PLA Palunteer platform as a service, because they said this right after the government point before they got into the whole AI business argument. I think they're talking about FedStart, and I think that makes a lot of sense.
FedStart is Palanteer's offering to basically say, hey, venture capital-backed startups that are in the defense technology space, which by the way, the United States has invested, or rather, venture capital in general has made $17 billion of private equity funding into defense technology startups. This is a trendy space.
This is a space that is growing. In 2019, we had, I believe, a couple of billion dollars in funding for defense technology startups . And last year it was 20, it was 34 billion. This year it 's already 17 billion. And we still have, you know, four more months of the year. Well , we're reaching a point where people are starting to realize, especially in the venture capital world : "Hey, this is a huge opportunity for companies that help protect governments, not only to improve and modernize in the world of AI, machine learning, etc.
, but also to gain a competitive edge on the battlefield and within their own government services, such as making the tax system more efficient." I mean , there are many different use cases for the government to adopt the technology. And given that defense technology in particular is starting to get more funding, the question is: how do you get $45 million in funding as a private tech startup in the defense technology sector and not be able to get the certifications to sell to the biggest customer, which is the US government , the Department of Defense?
Certain certifications are required. Certain guidelines are needed. Certain access controls are needed to allow you the opportunity to sell your product. And what Paltor is saying with FedSAR is that we've been doing all that for 20 years. We've passed through the lobby. We've been through the tough times.
We have sued the army for having gone through all of this. Why don't we provide you with a service and you pay us a fixed fee, a consulting fee, a service fee? They can use our casting platform which is IL6 certified. So now they can not only pay us for the consulting, which would be very, you know, minimal, a little like one or two million dollars, but they can also use our software.
This is where the real margins of 80% would come in. And our software can containerize your software to make it secure, accredited, and actually capable of selling it to the government. I think what ARC is saying here is that this idea of offering products and services to leverage Palanteer as a service/ platform to be able to sell to the government, if they believe that the government defense technology space is only going to grow, and the numbers, and Pounder published a great article last week explaining why the numbers are growing, show that it is getting bigger and bigger.
It makes perfect sense that that part of the thesis works. We don't know what Fed Start's figures will be, but you could say they will be solid because Pounder is only one of three companies in the world that has the IL Level Six certification. Therefore, when a startup needs that level of security or accreditation to be able to sell to the government, it should be able to call on a company like Palanteer for help.
Finally, AI. Well, the last thing they say in the interview is that, in essence, the AIP seems to make a lot of sense, and I think many people are starting to recognize the value of the AIP, which is the AI infrastructure, to securely train and model and enable an LLM to be productive for the organization.
What they're talking about here is that Pounder is really taking advantage of the AI opportunity and its market launch has been incredibly fast, which I agree with. It's been 15 weeks since they announced AIP and now they have 150 customers actively using it . And Codstrap clarified on Twitter that you can't have a client that uses AIP if you don't have Foundry, period.
So AIP, even if it's not being monetized, is selling them more Foundry because you have to have an ontology of your data so that AIP can connect to it and allow the LLM to have the context of your organization's reality so they can deliver productive results, which is what makes customers happy with AIP in the first place, right?
If it were producing bad results, you wouldn't be happy with it. So what they're saying here is that Foundry has been one of the things Foundry has been developing for a decade and that put them in a privileged position to be able to launch AIP. And this makes perfect sense considering what Sham said in an interview a month ago , where he said: "The reason we were so excited in December 2022 is because we immediately recognized why LLMs were valuable to the company, but more importantly, what it would take for those LLMs to actually deliver value to the company and what it takes for an LLM: a great language model to make sense of all your data and then give you the right answers, leading to increased productivity per employee for an organization." An ontology is a better understanding of your data.
A structured understanding of your data is an object- oriented relationship spreadsheet , not just a regular spreadsheet of your emails, transcripts, parts, and supply chains. If you can put all that together into something that makes sense instead of just a blank spreadsheet where you're trying to understand, for example, how column A relates to column B, but column A communicates with column B when you have an ontology.
And as a result , the LLM can find the relationship between column A and column B. It will give you better answers and train the model to be more effective. And I think what ARC is acknowledging here is that, well, if we believe that LLMs are the future, we believe that every organization in the world—NGOs, governments, non- profit organizations, commercial enterprises, government subsidiaries, government agencies working on the battlefield—any of these organizations, are going to need LLMs.
They're going to need an ontology. Therefore, Pounder's pre-existing software , their bread and butter, which has been Foundry, which has been, uh, what really put them on the map and what they've been developing for a decade; And what Karp said recently is that companies would have to spend five or six years developing something like Foundry, whereas we can keep improving it and making it better.
That's what's going to sell. AIP is the additional sale. AIP is what really adds a lot of value to your organization because you have Foundry. And as a result , what company is better prepared to embrace the technological revolution that AI and LLM represent for business than one that has spent 20 years building the foundations of what excites everyone so much: LLMs?
It appears to be Palanteer. And they give the example of chatbots that are implemented in an organization almost immediately, whether at the consumer end or the business end, because that chatbot can interact with the user or the consumer as long as it understands the organization's data . In this way, the chatbot can efficiently extract the correct answers or extract the appropriate context from the data to give the correct answers, and that is because it has something like a boundary setting.
So, overall, I think Cathy's thesis makes a lot of sense. They understand what is happening in the government sphere. They see the enormous opportunity that the commercial AI business space represents. They explained their reasons for leaving. They explained their reasons for returning. And it seems they've done an interview with Palanteer's chief technology officer , the man behind all the technology, Sham Sanker.
That gave them a broader and deeper context to understand where AI is, where it's going, and why the solutions Palanteer is building—I think one of the most important things they said was that they built it very quickly. Their market entry has been incredibly fast in terms of response and then in terms of time to deliver value to customers.
They have been able to do it because they are at the forefront of this and were ready for this moment. It's something they have to take advantage of. Now it's just a question of whether they'll be able to solve it. And as a result , Kathy Wood has been buying shares immediately because she's starting to believe in Palunteer's thesis again.
That's all. This is one of those videos that was very, very rewarding for me as a long-term investor, and I'm sure for many people who have been here throughout the Kathy Woods saga of buying, selling, and buying back. Okay, let me know what you think. Let me know what you think. Thank you so much for listening and watching, and we'll see you next time.
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