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Whitney Tilson: I’m Growing Fatigued of Microsoft

Microsoft hiked its dividend on Wednesday but the stock responded with a big yawn.

In fact, that’s been the Microsoft story for about the past decade with no catalyst big or small really able to set shares on fire.

Top hedge fund manager Whitney Tilson had been one of Microsoft’s die hard fans but on Wednesday he revealed to us that he’s losing patience with the stock.

”We’re getting fatigued,” he said. “They took a step in the right direction with the dividend increase but they should have taken a leap in the right direction. They’re sitting on a pile of cash. They should be paying a big dividend and buying back buckets of stock.”

And that’s not his only concern.

Microsoft’s decision to only increase the dividend modestly and hold onto that pile of cash raises the possiibility that the software giant could be looking to make an acquisition.

And looking at their history with acquisitions – it could be an acquisition that investors don’t like. “They vastly overpaid for Skype,” says Tilson. “Remember the Yahoo! offer,” adds Terranova.

”They’re drowning in cash. And companies that drown in cash tend to do something dumb with it. The market rumor is that could acquire RIM and that would be collassally dumb,” Tilson says.

Is Microsoft's Dividend Too Small?

Considering Tilson's affection for Microsoft has started to cool, where is Tilson putting money to work? Click here to go to Top Money Manager Tilson Spies Major Catalyst for Dell

* will be held October 17 and 18th in New York City. Whitney Tilson is co-founder and co-chair of the conference.

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Trader disclosure: On Sep 21, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Weiss is short BTU; Weiss is short CNX; Weiss is short TBT; Weiss is long QCOM; Weiss is long EUO; Weiss is long SDS; Weiss is long CDX; Adami owns (AGU); Adami owns (C); Adami owns (GS); Adami owns (INTC); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU); Terranova is long VRTS; Terranova is long OXY; Terranova is long HOS; Terranova is long OIH; Terranova is long CVI; Terranova is long AXP; Terranova is long EMC; Terranova is long WFM; Terranova is long AMZN; Terranova is long PCP; Terranova is long CF; Terranova is long WFC; Terranova is long AAPL; Terranova is long IBM; Finerman owns HPQ; Finerman owns YHOO; Finerman owns AAPL; Finerman owns BAC leaps; Finerman owns IBM and short calls; Finerman is long JPM; Finerman owns MSFT; Finerman owns ORCL; Finerman’s firm owns AAPL short calls; Finerman’s firm owns BAC; Finerman’s firm owns GOOG; Finerman’s firm owns JPM leaps and long puts; Finerman’s firm owns MSFT and short calls; Finerman’s firm owns ORCL; Finerman’s firm owns IWM; Finerman’s firm owns MDY; Finerman’s firm owns SPY; Cortes is long SO; Cortes is long CAG; Cortes is long Treasuries; Cortes is short EUR; Cortes is short AUD; Cortes is short S&P Futures; Stutland is long TLT; Stutland is long CSCO and has short calls; Stutland is long IBM and has short calls; Stutland is long INTC and has short calls; Stutland is long QCOM and has short calls; Stutland is long GLD and holds long option positions in calls and puts; Stutland is long TLT and has short calls and short puts; Stutland is long NLY and has short put spreads ; Stutland’s firm is a market maker of VIX

For Mike Vorhaus
**No disclosures

For Jim Iurio
Iuorio has long calls in VXX

For Rob Enderle
HPQ is a client of Enderle Group

For Jeff Saut
Raymond James is market maker of LINE with wires.

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