David Einhorn, investment guru, is trying to put an end to pediatric cancer, while suggesting that Microsoft put an end to CEO Steve Ballmer’s tenure. Microsoft's CEO, Steve Ballmer was in limelight over his "Windows 8 to Ship in 2012" statemens, prompting a denial from Microsoft's PR team
David spoke at the Ira Sohn Investment Conference
, hosted by a foundation that raises funds for childhood cancer research by drawing upon Wall Street’s elite to share their investment expertise with attendees.
Einhorn has reason to voice an opinion as to how Microsoft is run, although rarely does he do so in a public forum. Microsoft stock is among his Greenlight Capital hedge-fund-based company’s top ten holdings. Those holdings amount to over nine million shares of the computer giant’s stock. According to Einhorn, Microsoft is trading at a discount, so he recommends the stock as a "buy". On Nasdaq, MSFT stock
closed Thursday at $24.67, up 1.98 percent.
Fund managers who oversee more than $100 million must disclose their quarter-end holdings publicly by filing information with the Securities and Exchange Commission. As of December 31, 2010, Greenlight’s disclosed equity holdings were $4.8 billion across 38 holdings. Twenty percent of that was in technology, including not only Microsoft, but also Apple and Google.
Einhorn thinks Ballmer, CEO for the past 10 years, is behind the times and has not successfully pushed Microsoft into more current avenues. He feels that evolving technology is passing them by. However, finding someone of the caliber needed to run the mega company, plus convincing founder Bill Gates that Ballmer should be given a pink slip, will be no easy task. However, the board apparently shares some of Einhorn’s opinion. They withheld part of Ballmer’s bonus due to poor showings in the mobile and alternative computer form arenas. However, Ballmer’s motivation is larger than what comes in his pay check. His fortune is tied to Microsoft’s success in other ways – he owns more than 333 million shares of the company he leads, topped only by those held by Bill Gates according to Bloomberg.
Microsoft has conflicting directives – continue to draw almost guaranteed revenue from old boring standby products or venture into up and coming technologies, such as social networking, phones and tablets. Fixing the problem is not dependent upon just one man. Making a major course change usually means tackling the culture of an entire company. Besides, Microsoft is too big to turn on a dime.
There is a saying "Opinions are like noses, everyone’s got one." What then is Einhorn’s opinion worth? According to the Motley Fool
, an advocate for individual investors, cites data from AlphaClone
, a research and investment management firm, showing that someone who invested in Greenlight Capital’s 10 largest holdings at the time they were disclosed publicly each quarter would have returned 232percent since 2000, versus 10.5 percent for the S&P 500 (including dividends). Now that’s something you can put in the bank.
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