Many red flags caused me to short Salesforce.com

I recently shorted Salesforce.com (CRM). The two part analysis can be found on GuruFocus.com

Part 1 – Heavy insider selling for a stock with P/E over 200

Part 2 – Many red flags caused me to short CRM

Disclosure: I had a short position in CRM at the time of writing via Put options. I no longer have any positions in CRM.

About Adib Motiwala

Portfolio Manager at Motiwala Capital LLC
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3 Responses to Many red flags caused me to short Salesforce.com

  1. John says:

    If I was an executive for CRM I think I’d be selling too! Great analysis, do you have a time horizon on your short position?

    Interestingly, there are not as many short positions as I would have expected: http://shortsqueeze.com/?symbol=crm&submit=Short+Quote%99

  2. adibmoti says:

    Today a lot of the high beta or over valued stocks are down sharply. So, if you have shorted via a put option, you would have made some money already. Shorting via shares will take more courage as Wall St typically has supported this stock when it goes down.

  3. Ben says:

    I agree with you Adib, CRM is extremely highly valued and its growth is – relatively – coming down. There is a great series of article from Montier about shorting stocks relying on a value approach, based on price to revenue, asset growth and the use of “others” in financial statements. I looked at it a while back and CRM was basically scoring highly indicating it’d be a good short. However given the overall market “love” for CRM one has to be prepared to be patient!
    Cheers,
    Ben