This Data Should Make Microsoft Corporation (MSFT) Very Happy
Microsoft Corporation (NASDAQ:MSFT) isn't a battleground stock in the traditional sense, but it does have bulls and bears evenly divided. On one side, the bulls think that Microsoft's reorganization can help it to offer cloud, devices and services all under one ecosystem and be successful at doing so. Bears think, though, that Steve Ballmer and Co. would be best-served focusing on cloud software exclusively, and we'd have to agree with the latter. David Einhorn sure does.
In the eyes of many traders, hedge funds are assumed to be useless, outdated financial tools of a period lost to current times. Although there are over 8,000 hedge funds in operation currently, this site looks at the aristocrats of this club, around 525 funds. Analysts calculate that this group controls the majority of the hedge fund industry's total capital, and by paying attention to their highest performing stock picks, we've formulated a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Equally as useful, optimistic insider trading sentiment is a second way to analyze the marketplace. Just as you'd expect, there are many incentives for a bullish insider to sell shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the valuable potential of this tactic if you know what to do (learn more here).
Keeping this in mind, let's study the latest info for Microsoft Corporation (NASDAQ:MSFT).
How are hedge funds trading Microsoft Corporation (NASDAQ:MSFT)?
Heading into Q3, a total of 95 of the hedge funds we track were long in this stock, a change of 7% from the first quarter. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially.
Out of the hedge funds we follow, Jeffrey Ubben's ValueAct Capital had the largest position in Microsoft Corporation (NASDAQ:MSFT), worth close to $1.9941 billion, comprising 20.5% of its total 13F portfolio. Coming in second is Yacktman Asset Management, managed by Donald Yacktman, which held a $1.2479 billion position; the fund has 5.9% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Boykin Curry's Eagle Capital Management, Matt McLennan's First Eagle Investment Management and Ken Fisher's Fisher Asset Management.
As aggregate interest spiked, certain bigger names have jumped into Microsoft Corporation (NASDAQ:MSFT) headfirst. ValueAct Capital, managed by Jeffrey Ubben, created the largest position in Microsoft Corporation (NASDAQ:MSFT). ValueAct Capital had 1.9941 billion invested in the company at the end of the quarter. Donald Yacktman's Yacktman Asset Management also made a $1.2479 billion investment in the stock during the quarter. The following funds were also among the new MSFT investors: Boykin Curry's Eagle Capital Management, Matt McLennan's First Eagle Investment Management, and Ken Fisher's Fisher Asset Management.
Insider trading activity in Microsoft Corporation (NASDAQ:MSFT)
Insider buying made by high-level executives is best served when the company we're looking at has experienced transactions within the past six months. Over the last six-month time period, Microsoft Corporation (NASDAQ:MSFT) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).
We'll also review the relationship between both of these indicators in other stocks similar to Microsoft Corporation (NASDAQ:MSFT). These stocks are Intuit Inc. (NASDAQ:INTU), Adobe Systems Incorporated (NASDAQ:ADBE), salesforce.com, inc. (NYSE:CRM), SAP AG (ADR) (NYSE:SAP), and Oracle Corporation (NASDAQ:ORCL). All of these stocks are in the application software industry and their market caps match MSFT's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Intuit Inc. (NASDAQ:INTU)
Adobe Systems Incorporated (NASDAQ:ADBE)
salesforce.com, inc. (NYSE:CRM)
SAP AG (ADR) (NYSE:SAP)
Oracle Corporation (NASDAQ:ORCL)
Using the results demonstrated by our studies, average investors should always watch hedge fund and insider trading sentiment, and Microsoft Corporation (NASDAQ:MSFT) is an important part of this process.