Here's What Prompted Diamond Hill Select Strategy to Add Salesforce (CRM) to Its Portfolio

Diamond Hill Capital, an investment management company, released its “Select Strategy” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. Markets rebounded from a sharp downturn at the start of April following the President’s “Liberation Day” tariffs announcement. As measured by the Russell 3000 Index, US stocks rose approximately 11%. Large-cap stocks saw the highest increase this quarter, rising just over 11%, while small-cap and mid-cap stocks gained approximately 8.5% each. The portfolio delivered positive results in the quarter but trailed the Russell 3000 Index. The strategy returned 7.31% (net) vs 10.99% for the index. To get an idea of the fund’s best choices for 2025, check out its top 5 positions.

In its second-quarter 2025 investor letter, Diamond Hill Capital Select Strategy highlighted stocks such as Salesforce, Inc. (NYSE:CRM). Salesforce, Inc. (NYSE:CRM) offers Customer Relationship Management (CRM) technology that brings companies and customers together. The one-month return of Salesforce, Inc. (NYSE:CRM) was -4.35%, and its shares lost 10.45% of their value over the last 52 weeks. On September 29, 2025, Salesforce, Inc. (NYSE:CRM) stock closed at $245.10 per share, with a market capitalization of $233.335 billion.

Diamond Hill Capital Select Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its second quarter 2025 investor letter:

"Despite markets’ relatively sharp bounce following April’s downward volatility, we were able to initiate two new positions in the quarter at what we consider compelling valuations: Salesforce, Inc. (NYSE:CRM) and Antero Resources Corporation.

Salesforce provides customer relationship management (CRM) technology connecting companies and customers. Revenue growth has recently been pressured as the company has faced an unfavorable cyclical environment, investments in go-to-market enhancements, increased prices and decreased generative AI revenues. We believe as these trends reverse, revenue growth should reaccelerate. Margins should also expand in the period ahead as the company’s go-to-market strategy evolves, sales channel mix shifts, tech stack consolidates and as it transitions to third party data centers. Given this outlook, we capitalized on the tariff-related downturn by initiating a position at what we consider an attractive price relative to our estimate of Salesforce’s intrinsic value."

Salesforce, Inc. (NYSE:CRM) is in 16th position on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 121 hedge fund portfolios held Salesforce, Inc. (NYSE:CRM) at the end of the second quarter, compared to 140 in the previous quarter. In the second quarter of 2026, Salesforce, Inc. (NYSE:CRM) reported revenue of $10.25 billion, reflecting an increase of 10% year over year and 9% in constant currency. While we acknowledge the potential of Salesforce, Inc. (NYSE:CRM) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Salesforce, Inc. (NYSE:CRM) and shared list of stocks Jim Cramer discussed. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

Disclosure: None. This article is originally published at Insider Monkey.