It’s not everyday that you hear Goldman Sachs say it was wrong. Well, it has happened today; the firm announced it made a mistake downgrading Microsoft Corporation (NASDAQ:MSFT) to ‘Sell’ and has now upgraded the stock to ‘Neutral’ with a price target of $57 per share. In a 22-page research note, Goldman has analyzed the transition of the iconic software company to cloud-based services and the changes made to its latest versions of Windows operating system and Office software, praising the way the new management has executed the transition plan.
The Microsoft Corporation (NASDAQ:MSFT) fan club gained six more members from the hedge fund world during the third quarter, with 113 top funds reportedly holding stakes in the software giant. Activist investor Jeffrey Ubben is heavily invested in Microsoft, holding 75.3 million shares reportedly worth $3.33 billion at the end of September. Stephen Mandel chose to reduce his exposure, trimming his position by 5%. In its latest 13F filing, Lone Pine Capital reported holding 25.3 million shares valued at $1.12 billion.
Activists are stepping up their efforts to force Yahoo! Inc. (NASDAQ:YHOO) to abandon plans of spinning off its stake in Alibaba Group Holding Ltd (NYSE:BABA) and sell the core business instead. Jeffrey Smith‘s Starboard Value started the avalanche in November, having asked the management to revise its decision to sell its stake in Alibaba due to tax concerns. Joshua Friedman and Mitchell Julis, the managers of Canyon Capital Advisors has stated its support for Starboard’s initiative, according to a letter sent to Yahoo’s board of directors. Analysts are speculating that activists could go as far as a proxy battle, as rumors surfaced that several board members would be open to a change of management. With the stock down by 34% year to date, the remaining shareholders could rally to support the activist efforts, according to Brian Wieser, an analyst with Pivotal Research Group.
Jeffrey Smith more than doubled his investment in Yahoo! Inc. (NASDAQ:YHOO), taking it to 7.1 million shares worth $205 million during the third quarter. Canyon Capital Advisors has also reported an increase in its holding to 5.68 million shares valued at $164 million. Yahoo lost some of its appeal during the quarter, with the number of top hedge funds invested in the company decreasing to 89 from 104. Together they held roughly 20% of the company’s common stock.