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The Morning Brief: ValueAct's Big Bet on Microsoft; Paulson's Still Sold on Gold

San Francisco-based activist hedge fund firm ValueAct Partners has placed a big bet on Microsoft Corp., scooping up a nearly $2 billion stake in the company, CNBC reported on Monday. For ValueAct, which is known for scoping out undervalued companies, the move is partly a play on cloud computing, or software and services delivered via the Internet. While the market for the kind of pre-installed software Microsoft makes is losing steam amid falling demand for PCs, ValueAct CEO Jeffrey Ubben said at an investing conference on Monday that he thinks Microsoft will become the largest cloud-computing company in the world within the next three to five years thanks to its Azure software platform. The investment now stands as ValueAct's largest, ahead of its $1.6 billion stake in Motorola Solutions, and makes the hedge fund firm one of Microsoft's largest shareholders.

Microsoft shares rose 3.59 percent on Monday, closing at $30.83. The stock is up 11 percent this year through April 19, beating the S&P 500's 9 percent return. ValueAct gained 10 percent net of fees in the first quarter, following a return of 20.5 percent for 2012. The firm manages more than $10 billion.

John Paulson has not given up on gold. The Paulson & Co. founder and noted gold bug said his flagship Advantage Fund is down over 1 percent year-to-date largely due to a 16 percent decline in the price of the precious metal. But Paulson's still keen on the precious metal, writing, "...we believe that ongoing central bank purchases and strong gold demand from China and India will help support the gold price in the near term," in a letter to investors, according to Bloomberg News. The letter goes on to say that the Fed's continued open-ended bond purchases "increases the probability that money printing will eventually lead to inflation."

— Former Diamondback Capital Management fund manager Todd Newman, who faces sentencing on May 2 for his role in a $72 million insider-trading scheme, has asked the judge for leniency. Bloomberg News reports that Newman, in a memo filed April 18, argued that he should serve less than the 63- to 78-month prison term U.S. court officials are seeking--on the grounds that he didn't make as much as the court says he did from trading in Dell Inc. and Nvidia Corp., using illicit inside tips. While Newman was convicted in December of making $4 million in profits for Diamondback on the trades, his lawyers said he himself received only $442,761.

SAC Capital Advisors' Steve Cohen is looking to replenish some of the $1.7 billion lost to investor redemptions following the firm's settlement with the Securities and Exchange Commission over insider trading charges, according to the New York Post. Cohen is one of several managers pitching investors at a Goldman Sachs hedge fund conference being held at Yankee Stadium on Tuesday. Upwards of 500 investors have been invited to the event, where they will hear investment presentations from Cohen and other hedge fund luminaries such as Pershing Square Capital's Bill Ackman and Millennium Management's Izzy Englander.

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