Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards salesforce.com, inc. (NYSE:CRM).
salesforce.com, inc. (NYSE:CRM) investors should pay attention to a decrease in support from the world’s most elite money managers recently. salesforce.com, inc. (NYSE:CRM) was in 91 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 117. There were 97 hedge funds in our database with CRM holdings at the end of December. Our calculations also showed that CRM ranked #28 among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In today’s marketplace there are tons of tools stock market investors have at their disposal to size up their holdings. Two of the most under-the-radar tools are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the elite fund managers can trounce their index-focused peers by a solid margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Peter Rathjens of Arrowstreet Capital
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Do Hedge Funds Think CRM Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 91 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CRM over the last 23 quarters. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Ken Fisher’s Fisher Asset Management has the number one position in salesforce.com, inc. (NYSE:CRM), worth close to $2.7443 billion, accounting for 1.9% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, led by Ken Griffin, holding a $1.075 billion call position; 0.3% of its 13F portfolio is allocated to the stock. Other peers that hold long positions comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, David Goel and Paul Ferri’s Matrix Capital Management and Chase Coleman’s Tiger Global Management LLC. In terms of the portfolio weights assigned to each position ROAM Global Management allocated the biggest weight to salesforce.com, inc. (NYSE:CRM), around 28.55% of its 13F portfolio. TenCore Partners is also relatively very bullish on the stock, dishing out 13.35 percent of its 13F equity portfolio to CRM.
Because salesforce.com, inc. (NYSE:CRM) has witnessed falling interest from the smart money, we can see that there exists a select few fund managers who sold off their full holdings in the first quarter. Intriguingly, Rajiv Jain’s GQG Partners said goodbye to the largest position of the “upper crust” of funds tracked by Insider Monkey, comprising close to $296 million in stock. Panayotis Takis Sparaggis’s fund, Alkeon Capital Management, also dumped its stock, about $212.5 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 6 funds in the first quarter.
Let’s now take a look at hedge fund activity in other stocks similar to salesforce.com, inc. (NYSE:CRM). These stocks are Merck & Co., Inc. (NYSE:MRK), Novartis AG (NYSE:NVS), AbbVie Inc (NYSE:ABBV), Broadcom Inc (NASDAQ:AVGO), Accenture Plc (NYSE:ACN), Thermo Fisher Scientific Inc. (NYSE:TMO), and Eli Lilly and Company (NYSE:LLY). All of these stocks’ market caps match CRM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MRK | 79 | 6494373 | -3 |
| NVS | 19 | 1709243 | -4 |
| ABBV | 72 | 5916781 | -11 |
| AVGO | 53 | 3313279 | -6 |
| ACN | 48 | 2350908 | -2 |
| TMO | 79 | 6254066 | -10 |
| LLY | 55 | 2522416 | 5 |
| Average | 57.9 | 4080152 | -4.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 57.9 hedge funds with bullish positions and the average amount invested in these stocks was $4080 million. That figure was $8837 million in CRM’s case. Merck & Co., Inc. (NYSE:MRK) is the most popular stock in this table. On the other hand Novartis AG (NYSE:NVS) is the least popular one with only 19 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 72.3. 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 25.8% in 2021 through August 6th and still managed to beat the market by 6.7 percentage points. Hedge funds were also right about betting on CRM, though not to the same extent, as the stock returned 18.3% since the end of March (through August 6th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
