Investing in a single stock in this new decade is a risky investment strategy, given the years of market volatility. However, Étienne Breton diligently purchased shares of a single stock since the 2020 pandemic, which is today worth £1.8 million ($2.5 million). The 47-year-old tried to identify ‘extraordinary companies’ and narrowed it down to the Palantir (NASDAQ:PLTR) stock.
‘I tried to identify very extraordinary companies. I didn’t want to diversify,’ Breton said. He has potentially secured his retirement by investing in the software company consistently over the years, currently owning 17,800 shares as well as another 2,000 shares on margin.
Palantir shares are up 72% year-to-date and have gained 1,204% in the past five years. The stock has witnessed steady growth on the back of its rapid innovation in artificial intelligence, a robust pipeline of government contracts, and bullish investor sentiment.
Breton used to trade stocks but had decided to exit the market after the 9/11 stock market crash. Decades later, he saw an opportunity during the COVID-19 pandemic. ‘I saw someone selling all of their stocks because of the crash, so I did the exact opposite and opened an account,’ Breton told a media outlet.
When he came across Palantir on YouTube, Breton realised the company had the potential to solve complex issues he was facing as a technical expert at the manufacturing company related to data silos and supply chains. ‘I sold my real estate and put almost everything I had into the stock,’ he added.
Breton started purchasing the stock when it was trading at £ 7.30 ($10) per share and continued to grow his position despite prices dropping to £ 4.30 ($6) in 2020. He said he kept a tally of his trades on his garage wall.
Palantir shares bounced back to $10 apiece in 2023. By that time, Breton had already purchased 10,000 shares at an average price of £6.40 ($8.83). Once Palantir launched its Artificial Intelligence Platform in the same year, the stock began climbing rapidly to new highs and has soared to £95.40 ($130.74) per share as of the latest close.
Implementing a Range of Options Strategies
Options trading is a risky venture, but Breton’s conviction in Palantir’s massive stock upside encouraged him to try several options strategies to generate income on underlying shares.
‘I began selling covered calls seriously, but not on my core position. I used margin to buy thousands more shares and sell aggressive covered calls using a ladder strategy,’ Breton said.
In short, he borrowed money to buy Palantir shares, sold call options on those shares, and collected cash premiums for agreeing to sell shares at a certain price in the future. The laddering strategy, which involves spreading options contracts across different prices and expiry dates, also helped Breton create a stream of income.
The investor now uses the income generated from premiums on covered calls to further grow his core Palantir position. In an effort to hedge risks, Breton is also purchasing Long-Term Equity Anticipation Securities (LEAS) options with expiry dates of at least a year into the future, earning income on his underlying shares while benefiting from potential upside.
While Breton plans to grow his Palantir stake, he is open to investing in a new stock with the cash generated from the premiums. ‘I’m now planning my retirement, which is approaching much sooner than I ever expected,’ Breton said.
Disclaimer: Our digital media content is for informational purposes only and not investment advice. Please conduct your own analysis or seek professional advice before investing. Remember, investments are subject to market risks and past performance doesn’t indicate future returns.