10 Hedge Fund Managers Who Think Whitney Tilson is Wrong On Salesforce.com $CRM

Whitney Tilson gave a presentation last week arguing that Salesforce.com (CRM) is a momentum stock priced for perfection. Here is how he values CRM:

“Call me old school, but I think GAAP earnings matter and I think all compensation is an expense, whether it’s in the form of cash or stock options. But the company basically has no GAAP earnings to speak of, nor is it expecting any this year, so let’s give the company every benefit of the doubt and use its pro-forma earnings: $1.22trailing and $1.38 (the high end) for this year (up a mere 13%). What would be an appropriate multiple? 20x? 30x? Using 30x x $1.38 = $41.40 plus $10 in cash = $51.40. As I write this, the stock is nearly 3x this at $138.83, giving it a market cap of $19.5 billion. Let’s be even more generous and use free cash flow, and let’s annualize $135M of FCF in Q4, so that’s $540 million. Put a 20 multiple on this and that’s $10.8 billion, plus cash equals $12.2 billion, just over half of the current value.”

There were several hedge funds with large positions at the end of December. Here are the 10 hedge fund managers who think Whitney Tilson is Wrong on CRM:

1. Jim Simons – Renaissance Technologies: Jim Simons’ position is valued at $166 Million. He is definitely a momentum investor. So far he made a couple of millions from his stake.

2. Louis Navellier – Navellier & Associates: $66 Million

3. David Stemerman – Conatus Capital: $65 Million

4. David E. Shaw – D.E. Shaw: $40 Million

5. Steve Cohen – SAC Capital: $35 Million

6. Mark Kingdon – Kingdon Capital: $27 Million

7. Phill Gross – Adage Capital: $22 Million

8. Christopher Lord – Criterion Capital: $19 Million

9. Israel Englander – Millennium Management: $19 Million

10. Glenn Russell Dubin – Highbridge Capital: $16 Million