Does salesforce.com, inc. (NYSE:CRM) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
salesforce.com, inc. (NYSE:CRM) investors should be aware of a decrease in hedge fund interest of late. CRM was in 82 hedge funds' portfolios at the end of the second quarter of 2019. There were 93 hedge funds in our database with CRM holdings at the end of the previous quarter. Our calculations also showed that CRM ranked 21st among the 30 most popular stocks among hedge funds.
To most traders, hedge funds are assumed to be worthless, old financial tools of years past. While there are more than 8000 funds trading at the moment, Our researchers hone in on the elite of this club, approximately 750 funds. Most estimates calculate that this group of people watch over most of the smart money's total asset base, and by keeping an eye on their top stock picks, Insider Monkey has uncovered many investment strategies that have historically surpassed Mr. Market. Insider Monkey's flagship hedge fund strategy outperformed the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a look at the latest hedge fund action surrounding salesforce.com, inc. (NYSE:CRM).
What does smart money think about salesforce.com, inc. (NYSE:CRM)?
Heading into the third quarter of 2019, a total of 82 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CRM over the last 16 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Fisher Asset Management held the most valuable stake in salesforce.com, inc. (NYSE:CRM), which was worth $852.5 million at the end of the second quarter. On the second spot was Lone Pine Capital which amassed $446.3 million worth of shares. Moreover, Viking Global, Point State Capital, and Tiger Global Management LLC were also bullish on salesforce.com, inc. (NYSE:CRM), allocating a large percentage of their portfolios to this stock.
Because salesforce.com, inc. (NYSE:CRM) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there were a few funds who sold off their full holdings heading into Q3. Interestingly, Alex Sacerdote's Whale Rock Capital Management dropped the biggest stake of all the hedgies tracked by Insider Monkey, totaling close to $138.7 million in stock, and Josh Donfeld and David Rogers's Castle Hook Partners was right behind this move, as the fund sold off about $75.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 11 funds heading into Q3.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as salesforce.com, inc. (NYSE:CRM) but similarly valued. These stocks are HDFC Bank Limited (NYSE:HDB), Broadcom Inc (NASDAQ:AVGO), Costco Wholesale Corporation (NASDAQ:COST), and Royal Bank of Canada (NYSE:RY). This group of stocks' market valuations resemble CRM's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HDB,27,1159846,3 AVGO,53,3268502,0 COST,40,3254378,-4 RY,15,383122,-2 Average,33.75,2016462,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.75 hedge funds with bullish positions and the average amount invested in these stocks was $2016 million. That figure was $5804 million in CRM's case. Broadcom Inc (NASDAQ:AVGO) is the most popular stock in this table. On the other hand Royal Bank of Canada (NYSE:RY) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks salesforce.com, inc. (NYSE:CRM) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CRM wasn't nearly as popular as these 20 stocks and hedge funds that were betting on CRM were disappointed as the stock returned -2.2% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.