Reviewing My 2006 MSFT Investment

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Contributor Since 2013

I am mostly a value investor in individual stocks. Mostly in great North American companies. I reinvest dividends. I try to hold forever.

Sometimes I invest in small to mid cap companies with solid cash flow, balance sheets, and compelling price ratios. I will occasionally chase quality growth. Higher PEs, but with a justified growth rate. I usually disdain companies that don't make a profit...but have come to understand non-GAAP cash flow growth might justify speculation.

As to speculation, yes, I use smaller money to engage in deep risk. I'll play the greater fool theory. I'll ride speculative hype and hope to have a faster finger. Here I do my best to time the irrationality of the herd and the pump and dump collusion of smart money interests.I dollar cost average into index funds. When I have no alternative, such as with 401k plans.

But when possible, I convert to a self managed IRAs. I prefer to do it myself, avoiding fees and the inefficiencies of indices.I keep an eye on important macroeconomic metrics. The S&P500 PE. The tmc:gnp ratio. Distributions of income & wealth. Employment. Any systemic risk.

Stocks: AAPL. AWK. AQB. BAC. CLX. CNI. CSCO. CVS. DOC. DIS. DBX. FB. FSLR. GLW. GS. HON. INTC. JNJ. KHC. KO. LMT. MSFT. NOC. PATH. TSN. V. WFC. XPEV.

REITs: STWD.

Funds: VWELX. VMMXX. FTAWX. T Rowe Price Blue Chip Growth Trust t2. 

Annuity Funds: Vanguard VVA-Money Market.

I work in hi-tech. I am a software engineer. I work in silicon valley & often enough on wall street. I am a former US Army officer, where ironically I was introduced to more formal investing.I'm always seeking alpha. I'm open to collaborating in identifying good investing opportunities. I'm always learning and welcome criticism.

Summary

  • I bought MSFT in 2006 at a PE = 17.8, slight less than fair value.
  • MSFT has reverted to longer selling PEs.
  • MSFT has produced a 630.08% total return on 16.56% CAGR, routing the S&P500.
  • The reinvested dividends alone are worth near 2x of the basis, having returned 194.20%!!!

I bought MSFT in 2006 at less than fair value at a PE = 17.8. I always saw MSFT as a blue chip, warranting an 18 - 22 PE. I kept reinvesting dividends, many bought at extremely low PEs. My patience started to pay off in 2014, when growth spiked. MSFT then reverted to longer selling PEs. Always producing consistently strong top and bottom line fundamentals. The PE is now around 29.Here is a snapshot of this investment from Fast Graphs. Note it isn't totally identical to my investment. But illustrative enough.

Now here is my actual MSFT data and performance in detail.

date shares total price $/share type
8-May-2006 500 $ 11,831.95 $ 23.66 basis
14-Sep-2006 1.73 $ 45.00 $ 26.07 div
14-Dec-2006 1.69 $ 50.17 $ 29.76 div
8-Mar-2007 1.81 $ 50.34 $ 27.77 div
14-Jun-2007 1.65 $ 50.52 $ 30.54 div
13-Sep-2007 1.75 $ 50.69 $ 29.03 div
13-Dec-2007 1.59 $ 55.95 $ 35.10 div
13-Mar-2008 1.96 $ 56.12 $ 28.65 div
12-Jun-2008 2.05 $ 56.34 $ 27.44 div
11-Sep-2008 2.11 $ 56.57 $ 26.78 div
11-Dec-2008 3.35 $ 67.12 $ 20.04 div
12-Mar-2009 4.06 $ 67.56 $ 16.63 div
18-Jun-2009 2.9 $ 68.09 $ 23.46 div
10-Sep-2009 2.75 $ 68.47 $ 24.88 div
10-Dec-2009 2.31 $ 68.82 $ 29.78 div
11-Mar-2010 2.38 $ 69.12 $ 29.01 div
10-Jun-2010 2.77 $ 69.43 $ 25.07 div
9-Sep-2010 2.9 $ 69.79 $ 24.11 div
9-Dec-2010 3.17 $ 86.36 $ 27.28 div
10-Mar-2011 3.4 $ 86.87 $ 25.57 div
9-Jun-2011 3.67 $ 87.41 $ 23.84 div
8-Sep-2011 3.34 $ 88.00 $ 26.35 div
8-Dec-2011 4.34 $ 110.67 $ 25.48 div
8-Mar-2012 3.48 $ 111.54 $ 32.10 div
14-Jun-2012 3.86 $ 112.23 $ 29.11 div
13-Sep-2012 3.7 $ 113.00 $ 30.53 div
13-Dec-2012 4.77 $ 130.80 $ 27.44 div
14-Mar-2013 4.71 $ 131.90 $ 28.00 div
13-Jun-2013 3.84 $ 132.98 $ 34.66 div
12-Sep-2013 4.09 $ 133.87 $ 32.76 div
12-Dec-2013 4.38 $ 164.11 $ 37.45 div
13-Mar-2014 4.32 $ 165.34 $ 38.31 div
12-Jun-2014 4.105 $ 166.55 $ 40.57 div
11-Sep-2014 3.606 $ 167.70 $ 46.50 div
11-Dec-2014 3.892 $ 186.78 $ 47.99 div
12-Mar-2015 4.411 $ 187.99 $ 42.62 div
11-Jun-2015 4.121 $ 189.36 $ 45.95 div
10-Sep-2015 4.48 $ 190.63 $ 42.55 div
10-Dec-2015 4.015 $ 222.99 $ 55.54 div
10-Mar-2016 4.39 $ 224.44 $ 51.12 div
9-Jun-2016 4.332 $ 226.02 $ 52.18 div
8-Sep-2016 3.939 $ 227.58 $ 57.78 div
8-Dec-2016 4.124 $ 248.08 $ 60.15 div
9-Mar-2017 3.882 $ 249.69 $ 64.33 div
8-Jun-2017 3.467 $ 251.20 $ 72.46 div
14-Sep-2017 3.384 $ 252.55 $ 74.62 div
14-Dec-2017 3.194 $ 273.40 $ 85.59 div
8-Mar-2018 2.934 $ 274.74 $ 93.63 div
14-Jun-2018 2.729 $ 275.98 $ 101.12 div
13-Sep-2018 2.505 $ 277.12 $ 110.64 div
13-Dec-2018 2.787 $ 304.67 $ 109.30 div
14-Mar-2019 2.695 $ 305.95 $ 113.52 div

  • total shares: 667.822
  • basis: $11,831.95
  • avg $/share: 28.77 
  • avg $/share (basis shares offset by div shares): $17.72
  • current price: $129.35
  • current value: $86,382.78 
  • total return: 630.08%
  • CAGR: 16.56%
  • S&P500 wi reinvested Div total return: 190.505%
  • S&P500 wi reinvested Div CAGR: 8.607%
  • shares earned as reinvested dividends: 167.822
  • base value of shares earned as reinvested dividends: $7,378.60
  • current value of shares earned as reinvested dividends: $21,707.78 
  • reinvested dividend total gain: 194.20%

MSFT has crushed the S&P500 during this same time horizon. The growth has been remarkable for such a strong high cap. I kept faith with adaptive value investing fundamentals. Note: the dividends, many bought at low PEs have surged to gain 194.20% for a value of $21,707.78...which is near double the basis! 

These financial metrics are correlated to solid MSFT innovation, adaptability, and operational excellence. I continue to put primacy in such analysis. Reading cash flow, balance sheet, and income statements quickly. Only doing basic scenario and and market analysis.

I feel confident MSFT will be a forever stock for me. I won't buy unless I see a PE < 18. But that's okay if I have to wait. 

Disclosure: I am/we are long MSFT.

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