Hedge fund invests $2bn in Microsoft, thinks Redmond is undervalued
'Microsoft could be the largest cloud company in the world'
Microsoft's quarterly earnings report last week did little to reassure the markets that the company is on track to regain its former stock valuation, but a $2bn buying spree by a US hedge fund prompted an uptick in its share price on Monday.
At an investor conference Jeffrey Ubben, founder ValueAct Capital Management, said that investors aren't recognizing the long-term value that Microsoft holds, particularly with its strengths in server and back-end systems. His fund specializes in taking stakes in undervalued firms and spinning the shares into profitability.
"It is a dominant software company...and in the long term it will win out," Mr. Ubben said, the Wall Street Journal reports. In three to five years, he said, "Microsoft could be the largest cloud company in the world."
Microsoft's share price peaked at just over $50 a share at the height of the tech-share bubble at the turn of the century before falling down to around the $30 mark – a price it has maintained but not improved upon under Steve Ballmer's time as CEO. Ubben's comments, and his firm's investment, have boosted Microsoft's stock price by nearly 5 per cent.
Microsoft's management team said they "welcome the perspectives of shareholders," a Microsoft spokeswoman said in a statement. "We are committed to enhancing value for all shareholders, and will continue to take actions that we believe will enable us to achieve this objective." ®