COVID-19 Couldn’t Curb Hedge Funds’ Enthusiasm Towards salesforce.com, inc. (CRM)

Reymerlyn Martin

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of salesforce.com, inc. (NYSE:CRM) based on that data.

salesforce.com, inc. (NYSE:CRM) has seen an increase in hedge fund sentiment of late. CRM was in 117 hedge funds' portfolios at the end of the first quarter of 2020. There were 112 hedge funds in our database with CRM positions at the end of the previous quarter. Our calculations also showed that CRM is also among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are numerous indicators investors have at their disposal to assess publicly traded companies. A couple of the less known indicators are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the elite investment managers can outperform the market by a healthy amount (see the details here).

[caption id="attachment_792409" align="aligncenter" width="400"] Brad Gerstner of Altimeter Capital[/caption]

Brad Gerstner Altimeter Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we asked astrophysicist Neil deGrasse Tyson about Tesla, Elon Musk, and his top stock picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to analyze the recent hedge fund action surrounding salesforce.com, inc. (NYSE:CRM).

What have hedge funds been doing with salesforce.com, inc. (NYSE:CRM)?

At the end of the first quarter, a total of 117 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the previous quarter. On the other hand, there were a total of 93 hedge funds with a bullish position in CRM a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Fisher Asset Management was the largest shareholder of salesforce.com, inc. (NYSE:CRM), with a stake worth $1565.6 million reported as of the end of September. Trailing Fisher Asset Management was Viking Global, which amassed a stake valued at $504.9 million. Altimeter Capital Management, Matrix Capital Management, and Melvin Capital Management 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 Altimeter Capital Management allocated the biggest weight to salesforce.com, inc. (NYSE:CRM), around 13.63% of its 13F portfolio. HMI Capital is also relatively very bullish on the stock, designating 12.75 percent of its 13F equity portfolio to CRM.

With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. GQG Partners, managed by Rajiv Jain, initiated the biggest position in salesforce.com, inc. (NYSE:CRM). GQG Partners had $196.6 million invested in the company at the end of the quarter. William Duhamel's Route One Investment Company also made a $179.8 million investment in the stock during the quarter. The other funds with brand new CRM positions are Lei Zhang's Hillhouse Capital Management, Robert Pitts's Steadfast Capital Management, and Keith Meister's Corvex Capital.

Let's also examine hedge fund activity in other stocks similar to salesforce.com, inc. (NYSE:CRM). We will take a look at Bristol Myers Squibb Company (NYSE:BMY), Costco Wholesale Corporation (NASDAQ:COST), McDonald's Corporation (NYSE:MCD), and Medtronic plc (NYSE:MDT). 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 BMY,126,6887128,4 COST,68,4351741,-2 MCD,66,953580,9 MDT,59,1839749,-7 Average,79.75,3508050,1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 79.75 hedge funds with bullish positions and the average amount invested in these stocks was $3508 million. That figure was $7123 million in CRM's case. Bristol Myers Squibb Company (NYSE:BMY) is the most popular stock in this table. On the other hand Medtronic plc (NYSE:MDT) is the least popular one with only 59 bullish hedge fund positions. salesforce.com, inc. (NYSE:CRM) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but still beat the market by 15.6 percentage points. Hedge funds were also right about betting on CRM as the stock returned 23.5% in Q2 (through May 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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