Veteran trader makes bold move with Palantir, Rocket Lab and SoFi

Admiral Ackbar knew when it was time to bail.

The amphibious military commander of the Rebel Alliance achieved meme immortality when he uttered the fateful phrase “It’s a trap!” in “Star Wars: Return of the Jedi,” after learning that the Death Star was fully operational and open for murderous business.

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TheStreet Pro’s Stephen Guilfoyle isn’t so sure.

While the veteran trader doesn’t have to contend with a planet-destroying space station, he does invest in stocks, which on some days can be scary enough to make Darth Vader cry for his mommy.

Guilfoyle, whose career dates back to the floor of the New York Stock Exchange in the 1980s, invoked the Ackbar meme in a recent column following the stock market rally on May 29.

“Is this a trap?” he asked. “The answer is definitely ‘maybe.'”

Stocks surged after the Court of International Trade struck down President Donald Trump’s sweeping tariff agenda on the grounds that he had overstepped his authority. A federal appeals court quickly paused the decision.

Palantir CEO Alex Karp. The company is reportedly getting more government business.

Image source: Kevin Dietsch/Getty Images

Palantir getting more government business

“That certainly tempered any enthusiasm that had existed, though I must say that most human traders had expected a quick appeal,” Guilfoyle said. “The early-morning surge had something of a hollow, algorithm-driven feel to it.”

As far as trading goes, well, Guilfoyle did something he doesn’t usually do: He took some money off the table without reaching specific levels.

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“I did not cancel any target prices and still have large, long positions in several of my favorite names, but I used late-afternoon and after-hours strength and took an extra round of profit-taking across some of my beloved ‘Stocks Under $10’ plays, namely Palantir Technologies, Rocket Lab USA, and SoFi Technologies.”

So what’s going on with these companies?

Well, the Trump administration is expanding Palantir’s  (PLTR)  work with the federal government, according to The New York Times. 

The big-data-analytics-software provider has received more than $113 million in federal spending since Trump took office, including additional funds from current contracts as well as new ones with the Department of Homeland Security and the Pentagon.

These do not include a $795 million contract that the Department of Defense awarded the company last week. That money has not been spent.

At least three members of Elon Musk’s Department of Government Efficiency formerly worked at Palantir, the Times said, while two others worked at companies founded by the billionaire investor Peter Thiel, one of Palantir’s founders.

Fannie Mae  (FNMA) , or Federal National Mortgage Association, said it launched its AI-powered Crime Detection Unit in partnership with Palantir. 

CEO Alex Karp said that the mortgage fraud detection could be done in a way that “protects the underlying data and protects the privacy of the people submitting their forms,” CNBC reported. 

Rocket Lab USA makes important deal

Roth Capital analyst Suji Desilva on May 28 raised the investment firm’s price target on Rocket Lab  (RKLB)  to $35 from $25 and affirmed a buy rating on the shares, according to The Fly.

Desilva cited the aerospace company’s planned acquisition of privately held Geost, a sensor-payload vendor that targets primarily critical national security missions.

Related: Palantir gets great news from the Pentagon

He said he was encouraged by Rocket Lab’s portfolio expansion while it drives both diversification and increased opportunity to offer integrated solutions.

Stifel analyst Erik Rasmussen, also encouraged by the Geost acquisition, boosted his price target on Rocket Lab to $34 from $29 and maintained a buy rating. 

Rasmussen noted the deal’s strategic rationale as Rocket Lab is acquiring key technologies to enter the satellite-payload segment, “creating a new category and positioning the company as a disruptor for national security space.”

SoFi, which has seen its stock climbing recently, beat Wall Street’s first-quarter-earnings forecasts last month largely due to strong demand for its loans from both borrowers and investors. The company raised its full-year guidance.

Guilfoyle is also watching the University of Michigan’s May revision to its Consumer Sentiment Survey. Several other economic reports are due as well, including the Chicago PMI, the PCE Price Index and wholesale inventories.

And he just might take some profits from BlackBerry  (BB)  and Peloton Interactive  (PTON) , “as we also have nice gains to protect in those names.”

“Before anyone panics, I repeat, I remain long all of these names in decent size,” he said. “I have not changed target prices for any of them. This is just risk management.”

“These shares can always be added back if I am wrong,” Guilfoyle explained. “Aside from a heavy slate of macro this morning, there are some obvious bumps in the road developing.”

Related: Veteran fund manager unveils eye-popping S&P 500 forecast