Microsoft Corporation (MSFT): Two Key Indicators You May Have Overlooked

Is Microsoft Corporation (NASDAQ:MSFT) an exceptional investment now? Investors who are in the know are taking a pessimistic view. The number of bullish hedge fund positions dropped by 13 recently.

At the moment, there are plenty of metrics shareholders can use to watch publicly traded companies. Some of the most under-the-radar are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top money managers can outclass the broader indices by a significant amount (see just how much).

Just as key, optimistic insider trading sentiment is another way to break down the financial markets. Just as you’d expect, there are a variety of motivations for an upper level exec to downsize shares of his or her company, but only one, very simple reason why they would behave bullishly. Many academic studies have demonstrated the impressive potential of this tactic if piggybackers know where to look (learn more here).

With all of this in mind, we’re going to take a glance at the latest action surrounding Microsoft Corporation (NASDAQ:MSFT).

What have hedge funds been doing with Microsoft Corporation (NASDAQ:MSFT)?

In preparation for this year, a total of 95 of the hedge funds we track held long positions in this stock, a change of -12% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings significantly.

When looking at the hedgies we track, Donald Yacktman’s Yacktman Asset Management had the most valuable position in Microsoft Corporation (NASDAQ:MSFT), worth close to $797.9 million, accounting for 4.8% of its total 13F portfolio. On Yacktman Asset Management’s heels is First Eagle Investment Management, managed by Jean-Marie Eveillard, which held a $729.8 million position; the fund has 2.6% of its 13F portfolio invested in the stock. Other peers that hold long positions include Boykin Curry’s Eagle Capital Management, Ken Fisher’s Fisher Asset Management and Kerr Neilson’s Platinum Asset Management.

Because Microsoft Corporation (NASDAQ:MSFT) has faced falling interest from the entirety of the hedge funds we track, we can see that there exists a select few hedgies that elected to cut their positions entirely in Q4. It’s worth mentioning that Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC said goodbye to the largest position of all the hedgies we track, worth an estimated $286 million in stock.. Jeffrey Tannenbaum’s fund, Fir Tree, also dumped its stock, about $74.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 13 funds in Q4.

Insider trading activity in Microsoft Corporation (NASDAQ:MSFT)

Insider purchases made by high-level executives is most useful when the company in question has seen transactions within the past six months. Over the last six-month time period, Microsoft Corporation (NASDAQ:MSFT) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity 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). This group of stocks are the members of the application software industry and their market caps are closest to MSFT’s market cap.