Ballmer critic boosts Microsoft stake by more than 60 percent

David Einhorn

David Einhorn isn’t a Steve Ballmer fan, but he’s still a big believer in Microsoft — at least at its current share price.

Greenlight Capital, the hedge fund run by Einhorn, boosted its stake in Microsoft to 14.8 million shares as of June 30, up nearly 63 percent from 9.1 million shares three months earlier, according to a financial disclosure statement filed with the SEC yesterday.

On the surface, the move might seem odd, given that Einhorn publicly called on Microsoft’s CEO to step down in May, sparking widespread news coverage by questioning Ballmer’s leadership and saying it was time for the board to give someone else a chance to run the company.

However, it makes more sense after reading the transcript of his speech, which shows that Einhorn is actually bullish on Microsoft’s underlying business. The problem, in his view, is that Ballmer is dragging the stock down. But the company is trading at a “remarkable discount,” he said.

So by boosting his stake, he’s taking advantage of what he sees as a bargain.

Microsoft, currently trading around $25 a share, has been trading in $23-$29 range over the past year, and has only occasionally broken through $30 over the past decade. The stock is down 8.6 percent since the beginning of the year, but actually up by more than 5 percent since Einhorn’s remarks in May.

And hey, it could be worse for Microsoft. MarketWatch notes that Einhorn has completely shed his previously sizable Yahoo stake.

  • http://twitter.com/BasKoene Bas Koene

    Good for Microsoft. But I did like Ballmer.

  • Bob

    Ballmer is an anchor weighing down the business and the stock. Time to cut him loose before he completely drowns both.

  • BearMrkt

    Seems more like an Icann approach, the more shares you own the more weight it carries.  Bullish or not if he wants to be taken seriously he will need a much larger stake than his current holdings.  

    • Marketdunce

      He’s already taken seriously. Einhorn is one of the most famous hedge fund managers on the street. And you can bet that other funds with much larger holdings take notice of what someone with his record is saying.

  • Victor

    This is a no-lose trade for Einhorn. You make a lot of stink about Ballmer, and the guy actually quits, the stock easily goes up 15-25% on that news. You keep making fun of Ballmer, and the guy gets angry enough to syndicate with old pal Gates to take the company private, paying a premium of 40% in the process. So why wouldn’t Einhorn keep doing what he is doing? Buy more shares and make more noise!

    • Mark

      Gates is selling as fast as he can. And Ballmer sold 20% of his holdings last year. Neither is going to invest to take MS private, and I can’t think of a bank who would extend either the funds given their record over the last decade.