Invest with the Best Investors in the World

The elite money managers have decades of experience, huge research budgets, the best contacts, and long track records of success. The SEC requires these firms to report portfolio changes on form 13F each quarter.

The latest round of 13Fs with several of the world's best investors adding to large holdings in Microsoft (MSFT).

Julian Robertson delivered average annual returns of more than 30% from 1980 to 1998. Last quarter, Robertson bought 23,500 shares of Microsoft, adding to the 203,000 he held beforehand or 12% of his portfolio and second largest position.

Chase Coleman learned from Robertson, he was a technology analyst at Tiger Management. Last quarter, he bought nearly 2 million shares of Microsoft increasing the position to 11% of his fund.

Stanley Druckenmiller has consistently generated enormous returns (over 30% annually) on multibillion-dollar portfolios and he had never had a down year. The fund bought 55,000 shares of Microsoft which is 21% of his total portfolio.

Use GuruFocus.com to check out other big time investors with exposure to Microsoft.

The business is fantastic.

In the past 2 years, Microsoft has grown its sales 30% from $97 billion to $126 billion and profits increased 51% from $24 billion to $36 billion. The company has enough cash on its balance sheet to pay off all its debt and have $47 billion left over. They are rewarding shareholders well by increasing dividend payments by about 10% for the past 5 years.

Shares currently trade with an EV/EBITDA of 17.4 which is a premium to its own average and the S&P 500. The premium is justified by the strength of the business and its continued ability to grow rapidly even at such a large size.

In the chart below, you can see that Microsoft has traded above its rising 200-day moving average (200-DMA) since February.

Use the uptrend and business strength to collect a big cash payout.

Trade details:

Sell to open October 18 $130 puts on Microsoft for $3.50 using a limit order. Earn an instant 2.7% payment on your purchase obligation for agreeing to buy shares at a slight discount to current prices.

At expiration if shares are above $130: put sellers will keep the $3.50 for an 18.6% annualized return.

At expiration if shares are below $130: put sellers will buy shares at a 5.2% discount to Friday's closing price ($130 purchase price less $3.50 option premium received/ Friday's closing price).

Use a stop loss at $113. We are only risking 10.7% below the trades cost basis. Shares will have broken the uptrend and 200 DMA and it is best to exit to protect your principal.

The best investors believe Microsoft offers a strong chance to large gains in today's market. We can join them while taking less risk by selling a put option and collect cash today.

Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. The information provided should NOT be considered advice. The topics discussed are risky and have the potential to lose a substantial amount. I am not an investment professional and therefore do not offer individual financial advice. Please do your own research before investing.