In the third quarter, Salesforce (NYSE:CRM) continued to captivate investors with its impressive stock price, as evidenced by regulatory filings indicating increased investor interest despite a reduction in the stake of one of the software company’s early critics.
Sachem Head Capital Management boosted its stake in Salesforce by 33% during the third quarter, while Farallon Capital Management increased its holding by 30%, amassing 2.5 million shares as of September 30, according to the filings.
It’s noteworthy that both hedge funds had scaled back their investments in Salesforce during the second quarter.
Salesforce had emerged as a focal point for activist investors earlier in 2023, drawing attention from five influential corporate agitators, including Elliott Investment Management, who advocated for both public and private changes.
The implementation of cost-cutting measures, an augmentation in share buybacks, and the restructuring of its mergers and acquisition committee, coupled with robust earnings, garnered increased support from investors. Additionally, news of Mason Morfit from ValueAct Capital, one of the activists, joining the board played a role in quelling dissent, as per individuals familiar with the matter.
Since January, Salesforce’s stock price has witnessed a remarkable surge, reaching a 64% increase.
However, Starboard Value, the first activist to publicly address the need for changes at Salesforce in October 2022, has again reduced its stake, according to the filings. As of September 30, the hedge fund held 1.7 million shares, reflecting a 14% decrease from its second-quarter holdings. In the previous quarter, Starboard Value had already trimmed its stake by 20%.
Investment managers are obligated to disclose their U.S. stock holdings at the end of each quarter and submit this information to the Securities and Exchange Commission within 45 days thereafter. The deadline for the third-quarter 13-F filings is Tuesday.
While 13-F filings offer a retrospective view, they are closely monitored by investors for discernible trends.
During the third quarter, other investors who were not explicitly advocating for changes also decreased their holdings. Light Street Capital Management reduced its stake by 44%, and Polen Capital Management trimmed it by 3.2%, as per the filings.
Unlike some mutual funds, activist investors often swiftly adjust their positions following success or failure in their endeavors to instigate changes.
Despite a minor decline in the stock price during the third quarter, Salesforce has sustained an upward trajectory, concluding Tuesday’s trading at $221.18.
