The extraordinary activist-investor interest in Salesforce (CRM) eased further in the second quarter, according to the latest regulatory filings from influential Wall Street pros. These big-name investors also made moves in nine other Club stocks during a strong three-month stretch that ended the best first half for the market in years. Starting with Salesforce, Dan Loeb’s Third Point shed its stake in the second quarter. Jeff Smith’s Starboard Value — the first known activist to target the enterprise software giant — cut its stake by 21% in the three months ended June 30. Those sales are among the Club-related trades revealed this week by the latest batch of securities filings known as 13Fs. Submitted to U.S. regulators on a quarterly basis, these disclosures offer a look — albeit with some limitations — into the investment decisions that closely followed Wall Street pros have made. CRM .SPX YTD mountain Salesforce’s year-to-date stock performance, in comparison with the S & P 500. Third Point is at least the second of the five activist investors that recently pressured Salesforce to exit its position in the company. In the first quarter , Jeffrey Ubben’s Inclusive Capital sold all of the 1.63 million shares it had owned at the end of 2022. The activist retreat came after Salesforce this year delivered on improved profitability and cost discipline and shook up its board of directors. A recovery in the company’s stock price ensued in the first half, with shares further rising to a 52-week high in mid-July. Salesforce has cooled off a bit since then. Starboard’s Jeff Smith told CNBC last month , “What they’ve done is pretty dramatic.” His firm still owned about 2 million Salesforce shares as of June 30. Despite its second-quarter sales, Smith said he’s still optimistic about Salesforce, saying there’s room for additional operating-margin improvement and an acceleration of topline growth. “It’s still undervalued,” he argued in that July 25 interview. Shares of Salesforce have dropped about 7% since Smith’s remarks but remain up 57.5% year to date. Among the other shortcomings with 13Fs to keep in mind are the fact that short positions aren’t listed, preventing outsiders from obtaining a full understanding of a firm’s posture. More broadly, 13Fs are backward-looking snapshots, and by the time the filings become public, the firm’s holdings may have changed. The filings also only include the number of shares owned at the end of the period, and their value at that time. As a result, it’s not possible to determine a firm’s on-paper gains or losses from the filing alone. Analyzing these 13Fs is often referred to as whale watching. ValueAct, meanwhile, left its roughly 3.5 million share stake in the Marc Benioff-led company unchanged in the second quarter. ValueAct CEO and chief investment officer Mason Morfit now serves on Salesforce’s board. Uncertainty persists around the positioning of Paul Singer’s Elliott Management, the fifth known activist to agitate for change at Salesforce. As was the case in the first quarter , the hedge fund’s latest quarterly disclosure did not list any Salesforce stock. Elliott may have used a type of derivative that isn’t included in 13F filings to build what had reportedly been a multi-billion interest in Salesforce. STZ YTD mountain Constellation Brands YTD performance On the other hand, Elliott’s 13F did shine a light on the size of its stake in Club holding Constellation Brands (STZ): 441,000 shares, worth about $108.5 million, as of June 30. In July, the parent of Corona and Modelo announced it entered into an information sharing and cooperation agreement with Elliott — a favorable arrangement for fellow shareholders, like us. It enables representatives of the well-respected hedge fund to sit in on Constellation board meetings and obtain nonpublic information about the beer, wine and spirits company. The pact, however, restricts Elliott’s ability to trade Constellation shares. DIS YTD mountain Disney YTD performance Elsewhere, Nelson Peltz’s Trian Fund Management upped its position in Walt Disney Co. (DIS) by 8.6% in the second quarter, to roughly 6.43 million shares. Trian’s second-quarter purchases represent a reversal from the fund’s actions in the first three months of the year, during which it cut its stake by 34%. Peltz in February ended his brief proxy fight with Disney, after CEO Bob Iger embarked on a wide-ranging restructuring and cost-saving effort. But since then, Disney shares have significantly unperformed the market, falling from $110.36 on Feb. 9 — the day Peltz declared the proxy contest over — to around $87 at Tuesday’s close, a 21% decline. The S & P 500 , by contrast, has climbed more than 8% over that stretch. Famed hedge fund manager David Tepper loaded up on Nvidia (NVDA) over the three months ended June 30, boosting his stake nearly seven-fold, to 1.02 million shares worth about $41.67 million. At the end of the first quarter, Tepper’s firm, Appaloosa Management, reported owning just 150,000 shares of Nvidia, according to its 13F. After surging 90% in the first quarter, Nvidia shares advanced 52.3% in Q2. Tepper also more than doubled his Meta Platforms (META) position in the second quarter, owning 1.5 million shares as of June 30. His position in Microsoft (MSFT) more than quadrupled, filings showed, as Appaloosa Management owned 1.24 million shares as of June, up from 260,000 in the first quarter. Tepper also bought 2.3 million shares of Advanced Micro Devices (AMD) and 480,000 shares of Apple (AAPL) during the second quarter. Appaloosa didn’t report owning either AMD or Apple at the end of Q1. Despite Tepper’s sizable purchases involving Club stocks, it’s important to note that he’s known for being a nimble trader. As a result, Appaloosa’s holdings as of mid-August may differ significantly from the conclusion of the second quarter. GOOGL YTD mountain Alphabet YTD performance Bets on Google’s parent company, Alphabet (GOOGL), varied in the second quarter. Over those three months, Bill Ackman’s Pershing Square Capital Management grew its Alphabet position by 43%, to 11.56 million shares, which includes both Class A and non-voting Class C stock. Tepper raised his Alphabet stake by a more modest 9.5%, to 2.3 million shares. By contrast, Loeb’s Third Point reduced his Alphabet stake by 70% in Q2, to 1.4 million shares, filings showed. And, Baupost Group, the hedge fund run by value investor Seth Klarman , cut its Alphabet stake by nearly a third, to 4.12 million shares. AMZN YTD mountain Amazon YTD performance. Loeb and Klarman also moved in the same direction on Amazon (AMZN) during the second quarter, building new positions in the e-commerce and cloud giant. Third Point owned 4.1 million shares as of June 30, while Baupost’s holdings totaled 964,000 shares. For his part, Tepper reported owning 3.16 million Amazon shares at the end of Q2, up 58% from March 30. The newest Club holding, Oracle (ORCL), was owned by hedge fund pioneer Stanley Druckenmiller at the end of the quarter. Druckenmiller’s Duquesne Family Office accumulated its 271,265-share stake throughout the three months ended June 30. We started our position in Oracle on Tuesday. Druckenmiller took different paths on Club chipmakers Nvidia and AMD, both of which joined his portfolio in the fourth quarter of 2022. In the second quarter, he sold his entire AMD position, which stood at nearly 330,000 shares as of March 30, while he enlarged his Nvidia stake by 20% for a total of about 950,000 shares at the end of Q2. One non-tech move Druckenmiller made in the second quarter was trimming his Eli Lilly (LLY) holdings by 11.5%, to 536,445 shares. Shares of the drugmaker soared about 37% in Q2. Bottom line On their own, these quarterly disclosures should not serve as the intellectual basis for any investment decision. Despite their limitations, there’s educational value in going through them as part of the larger buy-and-homework process . This is especially true with disclosures from the more activist-oriented firms, such as Starboard and Elliott, because their involvement can help spark changes that benefit all shareholders. That’s been the case this year at Salesforce, and we expect to see that play out over time in Constellation Brands, too. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Marc Benioff, founder, chairman and CEO of enterprise cloud computing company Salesforce.
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The extraordinary activist-investor interest in Salesforce (CRM) eased further in the second quarter, according to the latest regulatory filings from influential Wall Street pros. These big-name investors also made moves in nine other Club stocks during a strong three-month stretch that ended the best first half for the market in years.
