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Here’s Why Salesforce (CRM) Became a Significant Detractor in Alger’s Q4 2020 Performance

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Jose Karlo Mari Tottoc
·4 min read
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Alger, an investment management firm, published its ‘Alger Spectra Fund’ fourth quarter 2020 investor letter – a copy of which can be downloaded here. In the letter, the fund highlighted their largest portfolio sector weightings, which is in Information Technology and Consumer Discretionary sector, with their comments on notable companies. The Communication Services sector together with the Industrial sector is where they achieved the largest chunk of their returns. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Alger Spectra Fund, in their Q4 2020 investor letter, mentioned salesforce.com, inc. (NYSE: CRM) and emphasized their views on the company. salesforce.com, inc. is a California-based software company that provides real-time messaging, file sharing capabilities, archiving, and other related services, to businesses. It currently has a $195.2 billion market capitalization. Since the beginning of the year, CRM delivered a -4.37% return, but its 12-month gains are still up by 71.20%. As of March 15, 2021, the stock closed at $212.80 per share.

Here is what Alger Spectra Fund has to say about salesforce.com, inc. in their Q4 2020 investor letter:

"Salesforce.com is a leading software as a service company. It provides turnkey Salesforce productivity and customer relationship management applications as well as a cloud-based development environment. Salesforce is a high unit volume growth beneficiary of the increased spending associated with corporate America's "digitization." We believe customers can potentially experience high return on investment on Salesforce deployments because the technology makes enterprises more productive and more profitable while fostering growth. The company has announced plans to acquire Slack Technologies at a significant premium to the industry's historic deal multiples. Slack Technologies provides businesses with real-time messaging, file sharing capabilities, archiving and other services.

Additionally, during the fourth quarter, Salesforce announced achieving significant earnings growth, but its revenues fell slightly short of expectations and the company's revenue guidance called into question the timing of the Slack acquisition, which hurt the performance of Salesforce shares. Finally, the company's Chief Financial Officer and President Mark Hawkins announced that he is retiring and is being replaced by Chief Legal Counsel Amy Weaver. This development was a continuation of a trend of senior management departures."

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Copyright: drserg / 123RF Stock Photo

Our calculations show that salesforce.com, inc. (NYSE: CRM) ranks 24th in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, salesforce.com, inc. was in 72 hedge fund portfolios, compared to 66 funds in the third quarter. CRM delivered a -3.83% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best innovative stocks to buy to pick the next Tesla that will deliver a 10x return. 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:

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