Hedge Funds Were Right About These 5 Stocks in 2021

3. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 250

Year-to-Date Gain in Share Price: 53%

The pandemic has fundamentally altered how many businesses operate. Microsoft Corporation (NASDAQ:MSFT), the software giant headquartered in Washington, has been one of the biggest beneficiaries of this boom. It offers an array of hardware and software for the workplace and analysts have backed Microsoft Corporation (NASDAQ:MSFT) to take advantage of the $2 trillion opportunity in the metaverse of work market by 2025. The firm also has solid pricing power and operating efficiencies. 

Fisher Asset Management is a leading shareholder in Microsoft Corporation (NASDAQ:MSFT)  with 25 million shares worth more than $7 billion. At the end of September, 250 hedge funds held stakes in Microsoft Corporation (NASDAQ:MSFT) worth $65 billion. This compared favorably to the end of the second quarter when 238 funds had held shares worth $62 billion in Microsoft Corporation (NASDAQ:MSFT). 

At the end of the third quarter of 2021, 250 hedge funds in the database of Insider Monkey held stakes worth $6.5 billion in Microsoft Corporation (NASDAQ:MSFT), down from 238 in the preceding quarter worth $6.2 billion.

In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ:MSFT) was one of them. Here is what the fund said:

“We have written extensively about Microsoft in recent commentaries. It was our leading contributor last year and one of our largest weightings within the Portfolio. It continues to experience business momentum through several dominant, essential, and competitively advantaged businesses, like Office 365 and Azure. The markets it competes for are enormous, which gives the company the ability to compound at scale. In the past quarter alone, the company generated over $40 billion in revenue, representing a 17% growth rate. The inherent operating leverage in Microsoft’s business model continues and led to 34% earnings growth this past quarter. Despite the broad rotation we saw in the first quarter and Microsoft’s robust performance in 2020, we think its business fundamentals continue to exhibit strength, and the stock continues to reflect the fundamentals.”