Usman Salis
● Back in 2014, fund manager Terry Smith wrote "Just the facts when weighing investments," making a contrarian case for Microsoft when the stock was deeply out of favor. Smith's analysis focused on fundamentals while the market was caught up in narrative.
● At the time, Microsoft was seen as yesterday's news. Critics compared it unfavorably to Apple and questioned whether it could stay relevant. But Smith wasn't interested in the popularity contest. He looked at the numbers: steady revenue, tight cost controls, and a proven ability to monetize software at scale.
● The real risk, as Smith saw it, wasn't Microsoft's business. It was market psychology. When investors decide something isn't cool anymore, capital flows elsewhere and valuations suffer, even when the underlying business is sound. Microsoft had the fundamentals, but it didn't have the story investors wanted to hear.
● That disconnect created opportunity. According to Ishfaaq Peerally note, a $10,000 investment then would be worth roughly $170,000 now. "It's not an obscure small-cap emerging market stock," just a massive tech company the market had mispriced.
● Microsoft's turnaround under Satya Nadella proved Smith right. The company bet on cloud computing, enterprise services, and eventually AI, transforming itself into one of the most valuable companies on earth. Along the way, it created jobs, drove innovation, and contributed significantly to tax revenues.
● Smith's call is a reminder that markets get emotional and miss the obvious. Sometimes the best opportunities are hiding in plain sight. His advice to "just stick to the facts" turned out to be worth following.
Usman Salis
