Yesterday, I was reading my friend Alex’s (from The Science of Hitting) Q3 portfolio update (here’s a recent podcast appearance from him!). I hope no one accuses me of giving spoilers, but two of the stocks he’s long are Microsoft (MSFT) and Facebook (META, though I will probably refer to them as FB throughout this post).
I’m long the stock, but I do think it’s worth pointing out that the quixotic CEO discount deserves to be large given the share class structure.
Also MSFT did a lot of stuff right. The “rhyming setup” analogy is a bit like saying it’s a 3-2 count with one out in the 6th inning and yesterday another team in the same situation put up 10 runs. They do still have to execute.
But the potential is there. Maybe a better baseball analogy is that the they have runners in scoring position and are bunting for some reason. One can easily imagine expected runs going up if they just stop bunting!
But that’s up to Mark -- no activist can touch META, just like fans can’t replace their team’s manager.
Tom! makes a good point about the "quixotic CEO discount." Moreover, Microsoft's 10-year run was set up by 2 factors not addressed above. (i) Microsoft was dead money for 14 years under Balmer before Nardella took over. (ii) During the last ten years, all big tech enjoyed the tail wind of of investor sentiment in a manner that may not make the next 10 years an easy comparable period. That said, I've recently gone (very) modestly long META because it's such a good/sticky business an idiot could run it (thanks Charlie and Warren). Thanks for the analysis; completely agree with almost all of your points (particularly the share repurchases).
I’m long the stock, but I do think it’s worth pointing out that the quixotic CEO discount deserves to be large given the share class structure.
Also MSFT did a lot of stuff right. The “rhyming setup” analogy is a bit like saying it’s a 3-2 count with one out in the 6th inning and yesterday another team in the same situation put up 10 runs. They do still have to execute.
But the potential is there. Maybe a better baseball analogy is that the they have runners in scoring position and are bunting for some reason. One can easily imagine expected runs going up if they just stop bunting!
But that’s up to Mark -- no activist can touch META, just like fans can’t replace their team’s manager.
Tom! makes a good point about the "quixotic CEO discount." Moreover, Microsoft's 10-year run was set up by 2 factors not addressed above. (i) Microsoft was dead money for 14 years under Balmer before Nardella took over. (ii) During the last ten years, all big tech enjoyed the tail wind of of investor sentiment in a manner that may not make the next 10 years an easy comparable period. That said, I've recently gone (very) modestly long META because it's such a good/sticky business an idiot could run it (thanks Charlie and Warren). Thanks for the analysis; completely agree with almost all of your points (particularly the share repurchases).