5 Best Software Stocks To Buy According To Hedge Funds

02. Salesforce, Inc. (NYSE:CRM)

Number of Hedge Fund Holders as of Q2, 2022: 116

San Francisco, California-based Salesforce, Inc. (NYSE:CRM) is the world’s leading customer relationship management platform provider. Its cloud-based platform has applications for sales, service, marketing, and more. More than 150,000 companies use the Salesforce, Inc. (NYSE:CRM) platform.

On September 28, Cleveland Research downgraded Salesforce, Inc. (NYSE:CRM) to Neutral from Buy. On September 29, Caroline Haskins of Business Insider revealed that Salesforce, Inc. (NYSE:CRM) has subtly grown into a sizable government contractor. According to Haskins, public contract data reveals that Salesforce, Inc. (NYSE:CRM) has closed more than 1,400 partnerships with government agencies in the last five years.

According to the Insider Monkey data on 895 leading hedge funds, 116 hedge funds were long Salesforce, Inc. (NYSE:CRM) shares as of Q2 2022, with the total shares held by hedge funds valued at $7.9 billion. Ken Fisher’s Fisher Asset Management was the largest shareholder on record, with ownership of 15.7 million shares valued at $2.6 billion.

Here is what Oakmark Funds specifically said about Salesforce, Inc. (NYSE:CRM) in its Q3 2022 investor letter:

“Salesforce, Inc. (NYSE:CRM) has become a dominant global player in sales, customer service, commerce and marketing software over the past 20 years. The company earns 80% gross margins and grows 20% organically. Plus, virtually all of its revenue is recurring. We see Salesforce as a great business that we’ve admired from afar for a long time. More recently, the organization has made some changes at the top that prompted us to take a closer look at the stock. New CEO Bret Taylor and CFO Amy Weaver are bringing a culture of financial discipline. We believe this renewed focus on profitability and capital return, combined with Salesforce’s strong underlying business characteristics, will yield strong results. The current valuation of 3.9x next year’s revenues represents a significant discount compared to publicly traded peers and recent private market values in the software space that have similar growth profiles. We view this discount as an opportunity to invest in a great business at a good value.”