The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th. We at Insider Monkey have made an extensive database of more than 867 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Microsoft Corporation (NASDAQ:MSFT) based on those filings.
Microsoft Corporation (NASDAQ:MSFT) was in 250 hedge funds’ portfolios at the end of September. The all time high for this statistic is 258. MSFT investors should pay attention to an increase in activity from the world’s largest hedge funds of late. There were 238 hedge funds in our database with MSFT positions at the end of the second quarter. Our calculations also showed that MSFT ranked #1 among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Chris Hohn
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to take a look at the key hedge fund action regarding Microsoft Corporation (NASDAQ:MSFT).
Do Hedge Funds Think MSFT Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 250 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MSFT over the last 25 quarters. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of Microsoft Corporation (NASDAQ:MSFT), with a stake worth $7195.9 million reported as of the end of September. Trailing Fisher Asset Management was Arrowstreet Capital, which amassed a stake valued at $5066.5 million. TCI Fund Management, Citadel Investment Group, and Tiger Global Management LLC were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Joho Capital allocated the biggest weight to Microsoft Corporation (NASDAQ:MSFT), around 27.2% of its 13F portfolio. Skye Global Management is also relatively very bullish on the stock, designating 26.62 percent of its 13F equity portfolio to MSFT.
As aggregate interest increased, some big names were leading the bulls’ herd. Bill & Melinda Gates Foundation Trust, managed by Michael Larson, established the most valuable position in Microsoft Corporation (NASDAQ:MSFT). Bill & Melinda Gates Foundation Trust had $828.2 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley’s Polar Capital also made a $710.4 million investment in the stock during the quarter. The other funds with brand new MSFT positions are Chris Rokos’s Rokos Capital Management, Philippe Laffont’s Coatue Management, and D. E. Shaw’s D E Shaw.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Microsoft Corporation (NASDAQ:MSFT) but similarly valued. We will take a look at Alphabet Inc (NASDAQ:GOOGL), Amazon.com, Inc. (NASDAQ:AMZN), Facebook Inc (NASDAQ:FB), Tesla Inc. (NASDAQ:TSLA), Berkshire Hathaway Inc. (NYSE:BRK-B), Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), and NVIDIA Corporation (NASDAQ:NVDA). This group of stocks’ market caps are similar to MSFT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GOOGL | 195 | 28555087 | 5 |
| AMZN | 242 | 42553102 | -29 |
| FB | 248 | 38569582 | -18 |
| TSLA | 60 | 10645154 | 0 |
| BRK-B | 106 | 19463815 | -10 |
| TSM | 67 | 9511459 | 3 |
| NVDA | 83 | 10050216 | -3 |
| Average | 143 | 22764059 | -7.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 143 hedge funds with bullish positions and the average amount invested in these stocks was $22764 million. That figure was $65878 million in MSFT’s case. Facebook Inc (NASDAQ:FB) is the most popular stock in this table. On the other hand Tesla Inc. (NASDAQ:TSLA) is the least popular one with only 60 bullish hedge fund positions. Compared to these stocks Microsoft Corporation (NASDAQ:MSFT) is more popular among hedge funds. Our overall hedge fund sentiment score for MSFT is 99.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on MSFT as the stock returned 17.5% since the end of September (through 11/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
