NEW YORK: Bill Ackman’s Pershing Square has built a US$2.1bil stake in Microsoft Corp, taking advantage of a decline in the company’s share price to invest in a business that he said is stronger and more resilient than investors think.
The hedge fund has made Microsoft a core holding, Ackman said in a post on X last Friday, calling its 365 suite of products, including Word and Excel and its Azure cloud service “two of the most valuable franchises in enterprise technology”.
Pershing Square’s position amounts to less than a tenth of 1% of the company’s market value.
Ackman also said he’d “sold Google” in a response to another X user but didn’t indicate how much of Pershing Square’s core holding in Alphabet Inc he’d exited or if it was a new sale.
Pershing Square disclosed that it had sold down about 4.1 million shares, most of its stake, in December, according to data compiled by Bloomberg.
The firm had a little more than 678,000 shares left at the time, the filings showed.
Microsoft shares rose 3.1% last Friday, the best showing in a month.
Alphabet shares declined about 1%.
Microsoft’s stock had fallen 15% this year through last Thursday’s close, with the world’s largest software company battling concerns over the adoption of its artificial intelligence (AI) assistant Copilot and whether its 365 business can fend off rivals.
The Redmond, Washington-based company has also struggled to add enough data centre capacity to keep up with cloud demand.
Ackman made a name for himself as an activist investor with an outsize presence on social media and a willingness to take concentrated positions in a relatively small roster of stocks.
He has a net worth of US$12.5bil, according to the Bloomberg Billionaires Index.
Ackman described Microsoft’s 365 products as “deeply embedded” across large companies and supported by the company’s infrastructure in a way that’s “nearly impossible to replicate”.
Strong demand for Azure, meanwhile, shows concerns about its growth are “misplaced”, he said.
Microsoft is a relatively late addition to Ackman’s big tech portfolio.
In addition to Alphabet, his firm already has sizeable stakes in Amazon.com Inc and Meta Platforms Inc.
Ackman also noted in his post on X that Microsoft owns leading businesses beyond its core franchises, including LinkedIn and Xbox.
In April, Microsoft and OpenAI agreed to drop the software giant’s exclusive right to sell the startup’s AI models, opening the door for the ChatGPT maker to pursue deals with rivals such as Amazon.
The loosening of their pact was widely seen as a win for OpenAI, which has sought out deals with more cloud providers to meet its growing computing needs.
Ackman argued that Microsoft’s restructuring of the OpenAI partnership was less a concession and more a “deliberate pivot toward a more open, multi-model architecture that better serves enterprise customers”.
When Pershing took a stake in Meta, Ackman similarly said investors were under-appreciating the company’s long-term potential upside from AI.
Last year, when he disclosed a position at Amazon, he predicted the company would work its way through a slowdown in its cloud business.
Meta shares are down 6.3% this year. Amazon’s stock has gained 16%. — Bloomberg
