Pershing Square Holdings, an investment holding company, released its second quarter 2026 investor letter. A copy of the letter can be downloaded here. Pershing Square is an alternative asset manager that primarily manages capital in publicly traded investment vehicles, with 98% of its capital structure dedicated to such assets, including Howard Hughes Holdings.
This capital permanency allows for long-term investments, fostering sustainable competitive advantages and yielding substantial market returns since 2018. The investment strategy focuses on acquiring high-quality companies at safe price points, anticipating significant annual EPS growth of 15% or more in the coming years. Additionally, reviewing the Fund's top five holdings could help identify its best picks for 2026.
In its Q2 2026 investor letter, Pershing Square Holdings highlighted Microsoft Corporation (NASDAQ:MSFT). Microsoft Corporation (NASDAQ:MSFT) is a multinational software company that develops and supports software, services, devices, and solutions, holding dominant positions in software, cloud infrastructure, generative AI, and gaming. On August 17, 2026, Microsoft Corporation (NASDAQ:MSFT) closed at $480.35 per share, reflecting a market capitalization of $3.57 trillion.
Microsoft Corporation (NASDAQ:MSFT) posted a one‑month return of 20.77%, while its shares lost 5.77% over the past 52 weeks. Pershing Square Holdings stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q2 2026 investor letter: "Microsoft Corporation's (NASDAQ:MSFT) share price increased 1% during the second quarter and is down 8% year-to-date from our average cost. The company's share price trades at one of its lowest earnings multiples of the past decade, reflecting investor concerns around AI disruption to the company's core M365 productivity suite and the growth prospects of its Azure cloud business as well as skepticism about the company's dramatically increased investment in compute infrastructure.
We believe M365's deep embeddedness in daily workflows, superior price-to-value proposition and proprietary Copilot AI agent make it far more resilient to AI disruption than point solution software. With direct involvement from CEO Satya Nadella, the company has redoubled Copilot product innovation and growing adoption should further entrench M365 as agentic work scales. In our view, Azure, the second largest public cloud hyperscaler, is well positioned in a supply-constrained compute market, and its capital expenditures are prudent investments to accelerate growth.
Microsoft is leading the shift toward a more open, multi-model ecosystem that lets enterprise customers optimize the ROI of their AI initiatives, which we believe will expand token consumption to Azure's benefit. Together, we believe that these tailwinds should enable Microsoft to sustain its high-teens historical earnings growth algorithm over the long term." Microsoft Corporation (NASDAQ:MSFT) ranks second on our list of 40 Most Popular Stocks Among Hedge Funds. According to our database, 282 hedge fund portfolios held Microsoft Corporation (NASDAQ:MSFT) at the end of the first quarter, compared to 312 in the previous quarter.
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