In a letter to partners, Einhorn explains why they dumped the stock, noting a comparison to beleaguered baseball player Alex Rodriguez. He also said they made a high “single-digit return” that slightly beat the public markets for the period they held the stock.

He writes:

In 2006 we compared Microsoft to A-Rod, which was a compliment at the time. In 2013, the comparison is still apt, but it is no longer a compliment. Windows 8 appears to be a flop, and a decade of mismanagement has put Microsoft at risk of becoming a shrinking company. We were pleased when an activist gave the stock a boost, giving us the opportunity to exit with an annualized high single-digit return that slightly outpaced the market during our lengthy holding period.

At an investment conference in New York two years ago, Einhorn said that Ballmer’s “continued presence is the biggest overhang on Microsoft’s stock.” Microsoft’s stock is up 18 percent so far this year, and up five percent in the past 12 months.

Don’t let the door hit you in the ass on your way out, David. A lot of so-called “gurus” have come to similar conclusions about such luminous names as Facebook, Google, and eBay. Pessimism never accomplishes anything.

Guest

Wake up. He was the optimist when everyone else was pessimistic. Now even he has thrown in the towel.

Ryan Parrish

Yes, because we all know what visionaries hedge fund guys are…

Bob

You don’t need to be a visionary to see that Ballmer has finally succeeded in destroying the company’s future.

Guest

Well, there goes one of the last believers in MS stock. Good job Ballmer and MS board.

Guest

Few people are smarter than the market. Einhorn is usually one. But this time he was wrong and the market was right. It’s tragic to see what Ballmer has been allowed to do to this company since taking over in 2000. For more than a decade, protected by Gates, he has made one wrong move after another while ignoring the criticisms from analysts, media, and even employees like Mini-Microsoft. He has made numerous epic competitive misjudgments. And yet here he still sits as CEO, even after the flop of W8 and the biggest earnings miss in a decade

Einhorn is applauded for his objective conviction for so publicly stating “the emperor has no clothes”. At the same time being naive to expect that after a dozen + years of failing against his #1 objective, that Ballmer would be pushed out.