3. Microsoft Corporation (NASDAQ:MSFT)
Totem Point Management’s Stake Value: $12,978,000
Percentage of Totem Point Management’s 13F Portfolio: 8.45%
Number of Hedge Fund Holders: 250
Totem Point was trimming many of its positions during Q3, ostensibly so it could reinvest that money in its one big purchase of the quarter, Microsoft Corporation (NASDAQ:MSFT), in which the fund initiated a new position of 46,036 shares valued at $12.98 billion as of September 30. A net total of 13 hedge funds tracked by Insider Monkey added MSFT to their 13F portfolios in Q3 following two quarters of declining hedge fund ownership.
Microsoft Corporation (NASDAQ:MSFT) has greatly outperformed the market over the past five years, gaining over 350%. Despite that, there is undoubtedly room for sustained share price appreciation given its impressive revenue and earnings growth, the former hitting 20% in Q2 of the company’s fiscal 2022 year, while operating profit grew by 24%.
Microsoft Corporation (NASDAQ:MSFT)’s intelligent cloud services have grown to become the company’s biggest segment and its sales growth continues to outpace Microsoft’s overall revenue growth. With Microsoft’s margins also expanding, the company is poised to continue growing earnings by leaps and bounds for as long as it can maintain 20%+ revenue growth, which could be for several years yet.
Alger, an investment management firm, published its “Alger Spectra Fund” fourth quarter 2021 investor letter and mentioned Microsoft Corporation (NASDAQ:MSFT). Here‘s what the fund said:
“Class A shares of the Alger Spectra Fund underperformed the Russell 3000 Growth Index during the fourth quarter of 2021. Microsoft Corp. was among the top contributors to performance. Microsoft is a Positive Dynamic Change beneficiary of corporate America’s transformative digitization. Microsoft’s CEO believes technology spending as a percent of GDP is likely to jump from about 5% today to 10% in a few years and that Microsoft will continue to take market share Microsoft’s enterprise cloud product, Azure, is rapidly growing and accruing market share. Microsoft reported that Azure grew 50% inthe past quarter. This high unit volume growth is a primary driver of the company’s higher share price, but strong operating execution has enabled margin expansion that has also helped to increase forward earnings estimates. We believe Microsoft’s subscription-based software offerings and cloud computing services have a durable growth profile because they enhance customers’ growth initiatives and help them to diminish costs. Additionally, investors appreciate Microsoft’s strong free cash flow generation and its return of cash to shareholders in the form of dividends and share repurchases.”
