Tracking what hedge funds are doing can be an excellent check when determining your investment strategy. If you see a couple of hedge funds loading up on a stock you own, you're probably on the right track. However, using this information at face value can also be an issue, as there are multiple reasons why a hedge fund might be buying a stock.

Renaissance Technologies, which delivered 62% annualized returns before fees and 37% after fees from 1988 to 2021 in its Medallion Fund, significantly increased its position in Palantir Technologies (NYSE: PLTR). In fact, Palantir saw the largest size increase of all the fund's positions, and now makes up 1.71% of the fund's assets -- the second-largest position.

So should you follow suit and load up on Palantir? Or is there something else going on here?

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Source Fool.com