Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about salesforce.com, inc. (NYSE:CRM).
salesforce.com, inc. (NYSE:CRM) was in 119 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 117. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. CRM investors should be aware of an increase in activity from the world’s largest hedge funds lately. There were 108 hedge funds in our database with CRM holdings at the end of June. Our calculations also showed that CRM ranked 11th among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Robert Pohly of Samlyn Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks 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. With all of this in mind let’s take a peek at the new hedge fund action surrounding salesforce.com, inc. (NYSE:CRM).
Do Hedge Funds Think CRM Is A Good Stock To Buy Now?
At third quarter’s end, a total of 119 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CRM over the last 25 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of salesforce.com, inc. (NYSE:CRM), with a stake worth $3772.6 million reported as of the end of September. Trailing Fisher Asset Management was Citadel Investment Group, which amassed a stake valued at $1166.8 million. Arrowstreet Capital, Akre Capital Management, and Matrix 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 Greenlea Lane Capital allocated the biggest weight to salesforce.com, inc. (NYSE:CRM), around 22.16% of its 13F portfolio. TenCore Partners is also relatively very bullish on the stock, dishing out 17.25 percent of its 13F equity portfolio to CRM.
Consequently, key hedge funds have jumped into salesforce.com, inc. (NYSE:CRM) headfirst. GQG Partners, managed by Rajiv Jain, created the biggest position in salesforce.com, inc. (NYSE:CRM). GQG Partners had $586.8 million invested in the company at the end of the quarter. Leon Shaulov’s Maplelane Capital also made a $252.2 million investment in the stock during the quarter. The following funds were also among the new CRM investors: Robert Pohly’s Samlyn Capital, Dmitry Balyasny’s Balyasny Asset Management, and Doug Silverman and Alexander Klabin’s Senator Investment Group.
Let’s also examine hedge fund activity in other stocks similar to salesforce.com, inc. (NYSE:CRM). These stocks are Comcast Corporation (NASDAQ:CMCSA), Royal Dutch Shell plc (NYSE:RDS), Exxon Mobil Corporation (NYSE:XOM), Toyota Motor Corporation (NYSE:TM), Pfizer Inc. (NYSE:PFE), Oracle Corporation (NASDAQ:ORCL), and NIKE, Inc. (NYSE:NKE). This group of stocks’ market caps resemble CRM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CMCSA | 75 | 8547154 | -9 |
| RDS | 33 | 2053904 | -5 |
| XOM | 64 | 4640444 | -4 |
| TM | 10 | 876130 | -2 |
| PFE | 74 | 2662716 | 7 |
| ORCL | 56 | 3473487 | 1 |
| NKE | 70 | 5682126 | 3 |
| Average | 54.6 | 3990852 | -1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 54.6 hedge funds with bullish positions and the average amount invested in these stocks was $3991 million. That figure was $14901 million in CRM’s case. Comcast Corporation (NASDAQ:CMCSA) is the most popular stock in this table. On the other hand Toyota Motor Corporation (NYSE:TM) is the least popular one with only 10 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 95. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately CRM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CRM were disappointed as the stock returned 5.1% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 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.
