Friday, December 17, 2010

Microsoft: Leveraged Recap?

Excerpt from an interview with Robert Kleinschmidt of the Tocqueville fund in Barron's where he talks about Microsoft (MSFT). He argues it makes sense for Microsoft to borrow lots of money and pay it out to shareholders. He says:

- It doesn't need all the cash it has

- It can't invest it all profitably

- It has strong businesses with moats

- It has a 10% FCF yield and a triple-A credit rating

He also said they could borrow long-term, pay it out to shareholders, while having no difficulty paying it off.

Interestingly, in the interview Kleinschmidt had favorable things to say about Pfizer not unlike what David Einhorn had to say in this previous post.

The list of other notable portfolio managers who held significant positions in or bought shares of Microsoft during 3Q 2010 include: Whitney Tilson, Donald Yacktman, David Tepper, Jean-Marie Eveillard, David Einhorn, Arnold Van Den Berg, John Griffin, Wally Weitz, and Tom Gayner.

Most of these managers are much more well known for value investing than technology investing.


I am a current MSFT shareholder

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