Pershing Square founder Bill Ackman built a Microsoft stake that became public in May, then added to it after selling most of the fund's Alphabet position. The move fits Ackman's broader bet on the tech sector, which he says drove the bulk of the S&P 500's gains this year.
Pershing Square bought more than 5.65 million Microsoft shares, worth nearly $2.1 billion as of the end of March. The purchase became public knowledge in May.
Adding to the position
The fund then sold its relatively small holding in Alphabet to buy more Microsoft shares. That brought the stake to slightly over 6.2 million shares, worth $2.3 billion as of the end of June.
Four slots in Pershing Square's limited equity portfolio are now held by prominent tech names. Alphabet, Uber, Meta Platforms, and Amazon together accounted for 40% of the fund's holdings in dollar terms at the end of last year.
The case Ackman made to shareholders
Ackman's letter to shareholders, covering Pershing Square's first quarter as a publicly traded company, laid out the reasoning. It noted that in the first half of this year, two of the 24 industry groups in the S&P 500 drove 85% of the index's year-to-date gains — semiconductors and IT hardware, both core parts of the tech sector.
The letter also described the profile Pershing Square looks for in a holding: "simple, predictable, and free cash flow-generative, with strong competitive positions".
Fool contributor Eric Volkman argues the better large-cap tech companies, Microsoft included, meet that bar, and expects Pershing Square to keep a tight grip on its sector holdings for a while.
Source: The Motley Fool
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