.NET News Desk
Fancy That. Somebody Believes in Microsoft
Hedge fund believes investments in the web and cloud could make MSFT the largest cloud company in the world in 3 to 5 years
By: Maureen O'Gara
Apr. 24, 2013 07:30 AM
Sometimes activist hedge fund ValueAct Capital Management LLP has up and plopped something like $1.9 billion into Microsoft’s stock with the expectation that it will amass more on the theory that the company is fundamentally undervalued.
It told the Wall Street Journal that it believes Microsoft will win out in the long term and that the company’s investments in the web and the cloud could make it the largest cloud company in the world in three-five years.
It’s a lot of money but represents less than a 1% position in the company although it does make ValueAct one of the top 15 investors in Microsoft and Microsoft ValueAct’s biggest holding.
It’s thought to be in for about 60 million shares.
Microsoft’s stock, once the making of many a millionaire, has been horribly range bound for at least 10 years. Windows 8 and Microsoft’s little adventure into tablets ain’t doing anything for it now and may in fact be dragging the whole PC market down.
According to CNBC, which broke the story, ValueAct only intends to try to light a fire under Microsoft, engage with its board or, perhaps, think about challenging CEO Steve Ballmer if it grows unhappy.
One percent isn’t that influential and Ballmer intends to stick around for another four or five years but ValueAct might galvanize other shareholders.
There’s speculation of a serious buyback but that would probably require a tax holiday on repatriation.
ValueAct’s disclosure Monday tickled Microsoft’s shares 3.6% to $30.83, a seven-month high.
The hedge fund manages about $8 billion.
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