We recently published a list of Joe DiMenna’s Stock Portfolio: Top 10 Stocks to Buy. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against other top stocks to buy from Joe DiMenna’s portfolio.
Zweig-DiMenna Associates Inc. is a U.S.-based hedge fund with a legacy spanning four decades. Established in 1984 by Joseph A. DiMenna and Martin Zweig, the firm specializes in absolute return investing. Its strategies encompass fundamental long/short equities and global macro approaches, positioning it among the longest-running hedge funds in the industry. DiMenna serves as the Managing Director and Chief Investment Officer, overseeing the firm’s partnerships and investment funds.
DiMenna’s initiation into the financial world began as a college student in 1977 when he became a research assistant for renowned investor Martin Zweig. A keen student of stock markets since his early teens, DiMenna had been an avid reader of financial newsletters, particularly Zweig’s highly regarded The Zweig Forecast. He earned a B.S. in Finance from Fairfield University’s Dolan School of Business in 1980. Beyond his work in finance, he has contributed to various organizations, serving on the boards of the Harlem Children’s Zone, Orchestra of St. Luke’s, The Brearley School, The Gilder Lehrman Institute of American History, and the New York Historical Society.
Zweig, a Ph.D. in finance, was known for his data-driven market analysis and the development of key investor sentiment indicators, including the Put/Call ratio. His well-known investment maxims, such as “Don’t fight the Fed” and “Don’t fight the tape,” significantly influenced DiMenna’s approach. Their professional relationship began when DiMenna, impressed by Zweig’s insights, reached out to him with market ideas and a request for a college recommendation. This correspondence led to his recruitment as a research assistant, a role that involved extensive data analysis, often delving into market trends spanning over 50 years. Zweig remained a key figure in DiMenna’s career until his passing in 2013.
After graduating in 1980, DiMenna continued working with Zweig, refining market research techniques and stock selection strategies. He took on editorial responsibilities for a stock-focused newsletter and co-developed a mutual fund trading business based on market timing principles. By 1983, DiMenna proposed leveraging their expertise to launch a hedge fund, a relatively rare venture at the time, with fewer than ten such funds in existence. In 1984, they established the first Zweig-DiMenna partnership, followed by the launch of Zweig-DiMenna International Limited in 1987. Their approach combined long/short equity investing with macroeconomic risk management. DiMenna led the stock selection and investment process, while Zweig focused on broader market conditions, shaping strategies that DiMenna implemented.
The fund quickly gained prominence for its strong returns. In 1999, BusinessWeek recognized DiMenna as “one of the best stock-pickers no one has ever heard of,” highlighting the fund’s impressive 15-year annualized return of 25% after fees, significantly outperforming the broader market’s 18.6% annualized total return.
DiMenna’s achievements earned him several accolades. In 2002, the National Foundation for Teaching Entrepreneurship named him “Entrepreneur of the Year” for his contributions to financial education. The Zweig-DiMenna International hedge fund won Absolute Return Magazine’s “U.S. Equity Fund of the Year” award in 2007 after delivering an 82.25% annual return, far surpassing industry peers. In 2008, Alpha Magazine ranked DiMenna 13th on its list of top moneymakers, citing his $450 million earnings in 2007 and his fund’s consistent double-digit annual returns between 2002 and 2007.
Our Methodology
The stocks discussed below were picked from Zweig-DiMenna Associates’ Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1008 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A development team working together to create the next version of Windows.
Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders as of Q4: 317
Zweig-DiMenna Associates’ Equity Stake: $40.77 Million
In February 2025, Microsoft Corporation (NASDAQ:MSFT) announced a breakthrough in quantum computing with the creation of a new state of matter, leading to the development of a topological qubit. This advancement is likely to accelerate progress in fields such as artificial intelligence, medicine, and cryptography. While some scientists remain skeptical about the achievement, the company believes its technology could surpass rivals like Google, which recently demonstrated a quantum computer capable of solving problems in minutes that would take classical supercomputers trillions of years. This development has intensified global competition, with China and the European Union investing billions in quantum research. Although still in an experimental phase, experts see quantum computing as a transformative technology with the potential to revolutionize various industries and national security.
As of Q4 2024, Zweig-DiMenna Associates held 96,728 shares of Microsoft Corporation (NASDAQ:MSFT), valued at approximately $40.8 million, making it the firm’s fifth-largest holding. Institutional interest in Microsoft continued to rise, with 317 out of 1,008 hedge funds tracked by Insider Monkey holding positions worth nearly $21 billion as of Q4 2024, an increase from 279 funds in the previous quarter. This growing investment from major financial institutions underscores confidence in Microsoft’s long-term growth potential and its strong position in the technology sector. MSFT remains a top choice for investors looking for stability and consistent returns.
Microsoft Corporation (NASDAQ:MSFT)’s financial performance in Q4 2024 further solidified its reputation, with revenue reaching $69.63 billion, exceeding market expectations of $68.81 billion and reflecting a 12.27% year-over-year increase. Earnings per share also outperformed forecasts, coming in at $3.23, 3.5% higher than consensus estimates. This impressive growth has been fueled by advancements in cloud computing, artificial intelligence, and groundbreaking developments in quantum computing. The company’s recent breakthrough in creating a topological qubit positions it at the forefront of next-generation computing, which could revolutionize industries and further strengthen its competitive edge. As Microsoft Corporation (NASDAQ:MSFT) continues to lead in innovation, its stock presents a strong investment opportunity with significant long-term growth.
Overall, MSFT ranks 5th on our list of top stocks to buy from Joe DiMenna’s portfolio. While we acknowledge the potential for MSFT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
