Bill Ackman Just Bought Microsoft Stock -- Here's Why It Could Be His Biggest Bet Yet

"Shares have shed more than 15% year-to-date, closing at $409.43 yesterday as investors fret about AI competition from Google and Amazon ( NASDAQ:AMZN ) and recoil from the company's eye-popping $190 billion capital spending plan for the year. When a stock gets that beaten up - especially one generating $82.89 billion in quarterly revenue, growing 18% year over year - the smart money tends to show up."

"Ackman is the founder and CEO of Pershing Square Capital Management, a hedge fund he launched in 2004 with $54 million in initial capital. Since then, he's built one of Wall Street's most closely watched portfolios - and one of its most concentrated. The fund's ethos rejected broad diversification in favor of concentrated positions in a small handful of companies, a strategy that demanded intense research because any misstep could drag down the entire fund."

"That high-conviction approach has paid off. Pershing Square generated a return of 692% net of fees over its first 10 years, versus 132% for the S&P 500. And when Ackman spotted COVID-19's threat to markets in early 2020, he invested $27 million in credit protection - a hedge that generated $2.6 billion in less than one month. That's the kind of track record that makes people listen when Ackman speaks."

"Pershing Square currently holds approximately $15.5 billion in assets under management spread across just 12 stocks. Let's put that in perspective: 12 positions for $15.5 billion means each holding averages nearly $1.3 billion. That's not diversification - that's deep conviction. The fund's current top positions tell the story clearly:"

Microsoft shares declined more than 15% year-to-date, closing at $409.43, as investors worried about AI competition from Google and Amazon and reacted to a $190 billion capital spending plan. The company still generated $82.89 billion in quarterly revenue and grew 18% year over year. When a stock is heavily sold off despite strong revenue growth, large investors may see value. Bill Ackman, founder and CEO of Pershing Square Capital Management, is known for concentrated, high-conviction portfolios rather than broad diversification. Pershing Square launched in 2004 with $54 million and produced a 692% net return over its first 10 years versus 132% for the S&P 500. The fund holds about $15.5 billion across 12 stocks, reflecting deep conviction in a small number of positions.

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