Hedge funds like ValueAct have bet big on Microsoft—but there are far better tech plays than this
Hedge funds with notable positions in Microsoft (MSFT) in relation to their overall portfolios bet heavily on MSFT in the first quarter of 2015. As we all know, technology companies such as Microsoft’s revenue growth is highly correlated with foreign exchange movement. The question that arises is whether a bet on MSFT is really a bet on the tech sector as a whole, or something more company specific.
Hedge fund ownership
According to aggregated 13F data, of the top five managers, only Vanguard Group and Capital World Investors increased their position in MSFT in 1Q15. The other three, namely State Street, BlackRock, and FMR, reduced their positions in MSFT. In the fourteenth slot was ValueAct Holdings, which increased its position in MSFT to an estimated $3 billion at the time of the filing.
In this series, we’ll go through MSFT’s scorecard over the last quarter to see if these bets have paid off, and take a deeper look at MSFT’s current and longer-term drivers. We’ll also analyze MSFT from the point of view of a multi-strategy hedge fund, and try to determine if it makes sense to allocate to MSFT as opposed to taking other avenues to get tech exposure.
To gain diversified exposure to MSFT, investors can consider ETFs such as the iShares U.S. Technology ETF (IYW), which invest 9.53% of its holdings in Microsoft.