Lots of Club holdings, including Nvidia (NVDA) and Alphabet (GOOGL), were among the stocks traded by some of Wall Street’s biggest investors and money managers in the first quarter. The latest disclosures also shed further light on the crowded activist investor battle at Salesforce (CRM), which heated up earlier this year. Salesforce activist interest CRM YTD mountain The stock performance of Salesforce so far in 2023. At least one of the five activist-focused hedge funds aiming at Salesforce no longer had a stake in the enterprise software giant, as of March 31, according to its quarterly securities filing. That firm, Jeffrey Ubben’s Inclusive Capital, had owned 1.63 million Salesforce shares at the end of December, worth nearly $217 million at the time. Jeff Smith’s Starboard Value also sold some Salesforce shares in Q1, leaving the firm with 2.5 million shares at the end of March. That’s down 16% from 3 million in the prior reporting period. Back in October, Starboard became the first activist to publicly target Salesforce — with Smith, at the time, criticizing the Marc Benioff-led company for a “subpar mix of growth and profitability” in recent years. The known activist pressure intensified in the months that followed Starboard’s announcement, with the aforementioned Inclusive Capital, Elliott Management, ValueAct Capital and Third Point joining the fold by early February. The pressure would ease in March after Salesforce unveiled plans to speed up profitability growth and delivered better-than-expected quarterly earnings alongside robust full-year guidance . By the end of March, Elliott Management had withdrawn its director nominations for Salesforce’s board — a clear win for CEO and co-founder Benioff. Elliott Management, which had reportedly built a multibillion-dollar stake in the company , did not report owning any Salesforce common stock in its first-quarter filing. The exact size of Elliott’s position had not been known because its fourth-quarter disclosure didn’t contain any direct Salesforce ownership, either. One caveat: Elliott is known to use cash-settled security-based swaps — a type of derivative — to build positions in companies. Investment firms can build exposure to a company through these swaps, instead of directly owning the common stock, without needing to publicly report them. Elliott did not respond to the Club’s request for comment Tuesday on the status of its Salesforce position. Mason Morfit’s ValueAct Capital amplified its Salesforce stake in the first quarter, ending with 3.5 million shares, up from just 560,221 shares at the end of 2022. In late January, Morfit was appointed to Salesforce’s board in a welcome shakeup. Third Point, the fund run by Dan Loeb, reported owning about 800,000 shares of Salesforce at the end of the first quarter. Loeb became the fifth-known activist in Salesforce , in early February. A bit of context: Institutional investors with at least $100 million in assets are required to submit these filings, known as 13Fs, to the Securities and Exchange Commission each quarter. The disclosures include long common stock positions, bonds and open options contracts. They offer insight in the moves of well-respected fund managers — “whale watching” as it’s known on the Street. However, there are some important limitations that Club members must keep in mind. For example, these filings every three months are just snapshots in time and are reported on a lag. By the time the public sees them, it’s very possible that holdings have already changed. This is especially possible for fund managers such as David Tepper, who is a well-known trader. Additionally, shorts — or bets that certain stocks will drop in value — are not listed in 13Fs, meaning we don’t get a full window into a fund’s posture. A.I. arms race in tech NVDA AMD YTD mountain The stock performance of Nvidia and AMD so far in 2023. Nvidia and Advanced Micro Devices (AMD) were popular targets in the first quarter, a three-month period that saw the stocks soar 90% and 51.3%, respectively. Hype around the adoption of artificial intelligence was a key driver of their stock performance. Loeb’s Third Point initiated a 1-million share position in AMD, worth $98 million, as of March 31. Loeb reportedly built the firm’s AMD stake in a passive manner, suggesting he won’t be agitating for strategic changes like he did when he owned AMD’s primary rival Intel (INTC), which has suffered steep losses in market share in recent years. Hedge fund pioneer Stanley Druckenmiller grew his Nvidia and AMD positions by nearly 36% and 7%, respectively, compared with the fourth quarter. As of March 31, Druckenmiller’s Duquesne Family Office owned 791,475 shares of Nvidia, then worth nearly $220 million, and 329,677 shares of AMD, then valued at $32.3 million. Druckenmiller initiated his Nvidia and AMD positions in Q4 of 2022. Tepper’s Appaloosa reported owning 150,000 shares of Nvidia, worth $41.7 million, as of March 31. The legendary trader did not own Nvidia common stock at the end of 2022. GOOGL YTD mountain Alphabet’s year-to-date stock performance. As Google scrambled to compete in the burgeoning A.I. arms race with fellow Club name Microsoft (MSFT), multiple high-profile investors built positions in parent company Alphabet. Bill Ackman’s Pershing Square Capital Management bet big on Alphabet in the first quarter, building a stake valued at nearly $1.1 billion at the end of March. Loeb’s Third Point amassed 4.75 million shares of Alphabet, worth $492.7 million at the end of the first quarter. That was Third Point’s fifth-largest position in the filing. Despite some early criticism, Alphabet’s most-recent A.I. announcements at its developer conference last week were greeted warmly by the market . Alphabet shares have gained some 12% since their close on May 9, the day before the event. On Tuesday, the stock rose about 3%, only a couple of dollars away from its 52-week high of $122.43 per share in August. Other Club-stocks mentions Loeb liquidated both his TJX Companies (TJX) and Disney (DIS) positions over the first three months of 2023. In the third and fourth quarters of 2022, Third Point had been building a sizable stake in the parent company of T.J. Maxx and Marshalls, ending the year with 2.65 million shares. With Disney, Loeb had steadily been paring back Third Point’s exposure to the media and entertainment giant after reaching agreements with management during the third quarter. Nelson Peltz’s Trian Fund Management reduced its Disney stake by 34% in the first quarter to 5.9 million shares. Since the Q1 reporting period concluded, however, Trian has reportedly bought back some of the Disney stock it sold earlier in the year. Bloomberg News reported Monday that Trian’s Disney position is now 6.4 million shares. Peltz in February called off his short-lived proxy fight with Disney after CEO Bob Iger rolled out a broad cost-cutting and restructuring plan. Druckenmiller significantly reduced Duquesne’s Meta Platforms (META) holdings, ending Q1 with 239,615 shares in the Facebook and Instagram parent. That’s down about 73% from 901,675 at the end of the fourth quarter. Meta shares have been on a tear since closing under $89 each in early November. The stock ended the first quarter at nearly $212 per share and traded around $238 on Tuesday — not too far away from a new 52-week high. Bottom line These quarterly disclosures should not, by themselves, inform an investment decision because of their limitations. A decision Tepper made at some point in the first quarter, for example, should not be a reason alone to buy or sell anything. However, there’s still value in sifting through these disclosures to get a high-level glimpse at which stocks renowned investors are interested in. For us at the Club, they are part of the “buy and homework” process that Jim Cramer has long evangelized. It’s helpful to understand who else is invested in your stocks, particularly in activist situations as we’ve seen with Salesforce. (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.
Signage for the Salesforce West office building in San Francisco, California, U.S., on Tuesday, Feb. 23, 2021.
David Paul Morris | Bloomberg | Getty Images
Lots of Club holdings, including Nvidia (NVDA) and Alphabet (GOOGL), were among the stocks traded by some of Wall Street’s biggest investors and money managers in the first quarter. The latest disclosures also shed further light on the crowded activist investor battle at Salesforce (CRM), which heated up earlier this year.