Shares of Salesforce (NYSE:CRM) stock opened in the green following a significant purchase from ValueAct Capital. ValueAct’s co-CEO and CIO, Mason Morfit, also serves as a director on the company’s board, classifying the purchase as an insider transaction.
Salesforce was already ValueAct’s largest holding as of the end of the first quarter, with the hedge fund owning 3.48 million shares. However, CRM stock is nearly 20% lower compared to the last trading day of March, much of which is attributed to a disappointing earnings report. That opened up an opportunity for ValueAct.
On June 3, ValueAct acquired 428,000 shares at an average per share price of $233.17. In total, the transaction was worth $99.79 million and brought the hedge fund’s CRM stake to 3.91 million shares.
CRM Stock: ValueAct Buys $99.79 Million of Shares
ValueAct operates as a highly concentrated fund with a top 10 position concentration of 97.54% and 13F assets under management (AUM) of $4.54 billion. ValueAct is also a long-term investor with an average 13F holding period of 10.33 quarters or just over 2.5 years. It first purchased CRM stock during Q4 of 2022 and has maintained its position every quarter since then.
The hedge fund’s initial CRM purchase was a success, as the customer relationship management company returned over 85% in 2023.
However, CRM plunged lower by 20% following the release of its fiscal Q1 earnings, marking the stock’s worst day since 2004. During the quarter, revenue grew by 11% year-over-year to $9.13 billion, compared to the analyst estimate for $9.17 billion. This marked the first time since 2006 that the company missed on revenue. On the bright side, Salesforce’s adjusted EPS of $2.44 beat the analyst estimate for $2.38.
The company’s guidance is what really hurt CRM stock. Salesforce expects fiscal Q2 revenue between $9.20 billion and $9.25 billion while analysts were looking for $9.37 billion. Adjusted EPS is forecasted to be between $2.34 and $2.36 compared to the analyst estimate for $2.40.
On the bright side, Wall Street remains bullish on CRM, with an average price target of $300.45.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
