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Were Hedge Funds Right About salesforce.com (CRM)?

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·5 min read
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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 887 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31st holdings, data that is available nowhere else. Should you consider salesforce.com, inc. (NYSE:CRM) for your portfolio? We'll look to this invaluable collective wisdom for the answer.

Is salesforce.com, inc. (NYSE:CRM) worth your attention right now? The smart money was cutting their exposure. The number of long hedge fund bets fell by 9 recently. salesforce.com, inc. (NYSE:CRM) was in 97 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 117. Our calculations also showed that CRM ranked #24 among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 106 hedge funds in our database with CRM positions at the end of the third quarter.

Chase Coleman of Tiger Global

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we're going to take a peek at the fresh hedge fund action encompassing salesforce.com, inc. (NYSE:CRM).

Do Hedge Funds Think CRM Is A Good Stock To Buy Now?

At the end of December, a total of 97 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in CRM over the last 22 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is CRM A Good Stock To Buy?
Is CRM A Good Stock To Buy?

Among these funds, Fisher Asset Management held the most valuable stake in salesforce.com, inc. (NYSE:CRM), which was worth $2779.9 million at the end of the fourth quarter. On the second spot was SB Management which amassed $676.9 million worth of shares. Altimeter Capital Management, Matrix Capital Management, and Tiger Global Management LLC were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Greenlea Lane Capital allocated the biggest weight to salesforce.com, inc. (NYSE:CRM), around 15.04% of its 13F portfolio. ROAM Global Management is also relatively very bullish on the stock, setting aside 14.83 percent of its 13F equity portfolio to CRM.

Since salesforce.com, inc. (NYSE:CRM) has faced bearish sentiment from hedge fund managers, logic holds that there were a few hedgies who were dropping their full holdings heading into Q1. It's worth mentioning that Robert Pitts's Steadfast Capital Management dumped the largest position of the 750 funds tracked by Insider Monkey, valued at close to $178.3 million in stock, and Ryan Frick and Oliver Evans's Dorsal Capital Management was right behind this move, as the fund sold off about $118.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 9 funds heading into Q1.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as salesforce.com, inc. (NYSE:CRM) but similarly valued. We will take a look at Intel Corporation (NASDAQ:INTC), Abbott Laboratories (NYSE:ABT), Oracle Corporation (NASDAQ:ORCL), AbbVie Inc (NYSE:ABBV), Cisco Systems, Inc. (NASDAQ:CSCO), Thermo Fisher Scientific Inc. (NYSE:TMO), and Broadcom Inc (NASDAQ:AVGO). This group of stocks' market values resemble CRM's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position INTC,72,5578824,6 ABT,64,4303482,2 ORCL,52,2450210,-4 ABBV,83,6965013,1 CSCO,60,4974309,1 TMO,89,5470797,9 AVGO,59,3342445,0 Average,68.4,4726440,2.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 68.4 hedge funds with bullish positions and the average amount invested in these stocks was $4726 million. That figure was $10576 million in CRM's case. Thermo Fisher Scientific Inc. (NYSE:TMO) is the most popular stock in this table. On the other hand Oracle Corporation (NASDAQ:ORCL) is the least popular one with only 52 bullish hedge fund positions. Compared to these stocks salesforce.com, inc. (NYSE:CRM) is more popular among hedge funds. Our overall hedge fund sentiment score for CRM is 70.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Unfortunately CRM wasn't nearly as successful as these 30 stocks and hedge funds that were betting on CRM were disappointed as the stock returned 3.6% since the end of the fourth quarter (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the more diversified list of the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.

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