Sold MSFT 20091110

I sold my final 50 shares of Microsoft MSFT this morning at $29.25.  I’ve had limit orders in a few times over the past few weeks, none of which went through, although I did allude to a sale in a previous post.  Microsoft is a solid company, and the decision to dispose of it was based purely on valuation (as I believe the market is overvalued, and MSFT is at least fairly valued).

With regard to Microsoft’s valuation, both S&P 500 and Morningstar rate MSFT at 3 stars (neutral).  Further, as I calculate, some of the valuation metrics look average.

  • The forward earnings yield is 5.7%
  • The trailing EBIT yield is 7.1%
  • The trailing cash return is 7.2%
  • The dividend yield is 1.8%

Now, I realize that trailing metrics are not perfect, but Microsoft’s financials aren’t incredibly volatile, so they are of some value.  Even more prevalent is that I am not relying on one metric, but a handful of perspectives that incorporate the income statement, statement of cash flows, and analysts’ reports.  Reasonably thinking, I no longer see a reason to own the stock at this time.

Keeping score:

8/1/2008 MSFT bought 50 25.2 -1267
9/11/2009 MSFT dividend 50 0.11 5.5
10/6/2008 MSFT bought 50 24.7 -1242
11/17/2008 MSFT bought 50 19.25 -969.5
12/11/2008 MSFT dividend 150 0.13 19.5
2/6/2009 .msqgq sold call July $23 1 0.84 75.74
3/12/2009 MSFT dividend 150 0.13 19.5
6/18/2009 MSFT dividend 150 0.13 19.5
7/17/2009 MSFT option converted 100 23 2282.94
9/10/2009 MSFT dividend 50 0.13 6.5
11/10/2009 MSFT sold 50 29.25 1455.56
            $  406.24

These transactions equate to about a 12% return.  (I say about because there really are various cash flows at different times, but the two main cash flows are both about a year in length).

News item:

My last major article, The Next Recession, was published today on Seeking Alpha.  Here is the link:

http://seekingalpha.com/article/172420-the-next-recession

I am currently working on a follow up to the article and hope to have it published soon.