Is Microsoft Corporation (MSFT) A Smart Long-Term Buy?

Alger, an investment management firm, published its “Alger Spectra Fund” first quarter 2021 investor letter – a copy of which can be downloaded here. During the first quarter of 2021, the largest portfolio sector weightings were Information Technology and Consumer Discretionary. Class A shares of the Alger Spectra Fund underperformed the Russell 3000 Growth Index during the first quarter of 2021. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Alger Spectra Fund, in their Q1 2021 investor letter, mentioned Microsoft Corporation (NASDAQ: MSFT) and shared their insights on the company. Microsoft Corporation is a Redmond, Washington-based technology company that currently has a $1.9 trillion market capitalization. Since the beginning of the year, MSFT delivered a 16.33% return, extending its 12-month gains to 47.80%. As of April 19, 2021, the stock closed at $258.74 per share.

Here is what Alger Spectra Fund has to say about Microsoft Corporation in their Q1 2021 investor letter:

“Microsoft Corporation was among the top contributors to performance during the quarter. Microsoft is a Positive Dynamic Change beneficiary of corporate America’s transformative digitization. Microsoft’s enterprise cloud product, Azure, is rapidly growing and accruing market share. Recently, Microsoft reported that Azure grew 50% during the fourth quarter. This high unit volume growth is a primary driver of the company’s higher share price, but Microsoft’s operating execution has enabled notable margin expansion that has also helped to increase forward earnings estimates. Microsoft’s subscription-based software offerings and cloud computing services have not been entirely immune to the pandemic-related economic slowdown but are resilient because they enhance customers’ growth initiatives and help them to reduce 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.”

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Our calculations show that Microsoft Corporation (NASDAQ: MSFT) ranks 2nd in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Microsoft Corporation was in 258 hedge fund portfolios, compared to 234 funds in the third quarter. MSFT delivered a 21.67% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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Disclosure: None. This article is originally published at Insider Monkey.