Sutter Rock Capital Could Be Big Winner From Palantir IPO

Secretive counterterrorism and data analytics company Palantir Technologies has filed to go public in September.

A public listing of Palantir shares will finally give the company a valuation, which could be good news for Sutter Rock Capital Corp. SSSS, an early investor in Palantir.

About Palantir's IPO: Palantir recently filed to go public via a direct listing that will likely take place in September.

Early estimates call for a $20-billion or more valuation for the data analytics company, which is venturing from the private sector to public sector in hopes of growing revenue. The company is estimating that 2020 revenue will hit $1 billion and rise to $1.5 billion in 2021.

Sutter Rock's Palantir Stake: In the second quarter, Sutter Rock Capital reported a net asset value of $11.84 per share. This was an increase from the $10.22 reported in the first quarter. Palantir was the company’s third-largest holding.

Sutter Rock is valuing its stake in Palantir at $30.5 million with a cost basis of $16.2 million.

This makes the stake just over 15% of the company’s portfolio. According to its earnings call, Sutter Rock has an implied valuation of $12 billion for Palantir. 

The Effect On Sutter Rock: If Palantir is valued at $20 billion, the net asset value of Sutter Rock should rise considerably. The company has been conservative with valuing shares due Palantir being privately held.

After years of holding a stake in Palantir, Sutter Rock will be able to see fair value and could eventually liquidate its stake.

Other Sutter Rock Investments: Aside from Palantir, Sutter Rock's other top five holdings include Coursera, Course Hero, Ozy Media and Nextdoor.

The company’s investments in Coursera and Course Hero are part of the education technology segment, which makes up 48% of the company’s assets.

Coursera raised $130 million in July, valuing the company at $2.5 billion.

Sutter Rock has held shares of companies after they go public and waited for the right time to sell them.

This occurred with its shares of Lyft, Inc. LYFT, which have been sold.

What’s Next: Sutter Rock Capital continues to see its share price rise in anticipation of the Palantir IPO. Shares are now up 95% in 2020.