Hedge fund grabs $2bn stake in Microsoft

A hedge fund executive has revealed that his company owns a US$2-billion stake in Microsoft and that he reckons other investors don’t appreciate the value of the tech giant’s businesses.

Speaking at an investor conference, ValueAct Capital Management LP founder Jeffrey W Ubben revealed the stake and how much it was worth. While he did not reveal exactly how many shares his company has in Microsoft, their value suggests that it amounts to less than one percent of Microsoft’s total shares outstanding.

According to the Wall Street Journal, Ubben’s disclosure helped push Microsoft stocks up 3.6% to US$30.83 on Monday.

In response, the Redmond-based giant said that it “welcome[s] the perspectives of shareholders” and that it is “committed to enhancing value for all shareholders, and will continue to take actions that we believe will enable us to achieve this objective.”

The journal reports that ValueAct has shares in a small number of companies and is renowned for trying to influence change and seek board seats in those companies.

While other investors have talked up Microsoft in the past, they’ve tended to come with caveats. Two years ago, for instance, hedge fund investor David Einhorn talked up Microsoft as a business while criticizing CEO Steve Ballmer’s ability to run it.

If Ubben has the same feelings on Ballmer, he didn’t make them public. Instead he stated that investors didn’t understand certain parts of Microsoft, particularly the back-end corporate software it sells to power servers and big databases.

“It is a dominant software company…and in the long term it will win out,” he said, adding that he was seriously impressed by the company’s cloud-based business. In fact, he reckons that “Microsoft could be the largest cloud company in the world” in the next three to five years.

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