Hedge Funds Microsoft
Hedge Funds Buying "Insanely Cheap" Microsoft Shares
Several hedge funds recently bought up "insanely cheap" shares of Microsoft Corporation (MSFT). The giant computer software corporation has been trading around $23 a share, and in the second quarter of 2010 hedge funds including Greenlight Capital, TPG Axon, Blue Ridge, GMT Capital viewed this as too low a price.
The decline means the stock is now trading around 10 times expected earnings for the next 12 months, close to its lowest multiple on record and a 70 percent discount to peers, according to StarMine data. And taking into account Microsoft's $37 billion of cash, the true multiple is more like 8, some investors said.
"That's insanely cheap for a company of this caliber and market position," said Whitney Tilson, managing partner of T2 Partners LLC and the Tilson Mutual Funds, who bought Microsoft shares in the second quarter.
While most investors seem to have concluded that the growth days of the stock are over, a growing faction of savvy hedge funds -- including Singh's TPG Axon, Einhorn's Greenlight Capital, John Griffin's Blue Ridge and Thomas Claugus's GMT Capital -- see an undervalued opportunity in the huge and increasing profits delivered by the Windows 7 operating system and Office franchise. Source
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