Activist investor Bill Ackman disclosed a new position in Microsoft on Friday, alerting Wall Street to a deeply undervalued, $3.1 trillion Pacific Northwest software company that he believes could one day be a player in artificial intelligence.
In a 13F filing submitted late Friday, Pershing Square Capital Management revealed a massive new stake in the $3.1 trillion enterprise. According to sources close to the fund, Ackman began aggressively accumulating shares after a rigorous internal investigation revealed that nearly every Fortune 500 company relies on Microsoft's cloud infrastructure to function on a daily basis.
The filing suggests the broader market has fundamentally mispriced the maker of the Windows operating system, which is currently the most widely held and heavily traded equity in the history of human commerce. Pershing Square analysts reportedly spent weeks running complex discounted cash flow models to determine whether the company that invented modern enterprise software might have a future in the technology sector.
Bill has a unique talent for looking at a company that prints $100 billion in annual free cash flow, is owned by every pension fund on earth, and has been aggressively covered by thousands of analysts for forty years, and asking, ‘What if this is actually good?
The decision to take a long position in the single most ubiquitous technology asset in global markets highlights Ackman’s signature willingness to stand completely alone alongside the rest of the S&P 500. While rival hedge funds have been distracted by complex derivatives and volatile startups, Ackman’s team spent months modeling out a speculative, high-conviction thesis that enterprise clients might continue using Word and Excel in the coming decade.
Following the disclosure, Microsoft shares traded flat, as the underlying market mechanics of a $3.1 trillion market capitalization comfortably absorbed the billionaire’s visionary endorsement without noticing it had happened. In a letter to investors, Ackman indicated he is already preparing an expansive 80-page presentation on his next massive, unrecognized value play, an obscure Cupertino-based hardware firm called Apple.