With its stock price down about 5% year to date and a fairly narrow trading range in 2016, it's pretty clear individual and institutional investors alike aren't quite ready to pronounce Microsoft (NASDAQ:MSFT) as a "cloud-first" behemoth making strides in its transformation efforts.

On the institutional side of things, 10 billionaire investors bought a total of 6,607,638 Microsoft shares in 2016's Q1 according to 13-F SEC filings. Though not as many big-hitters sold Microsoft to begin the year, the five that did shed a whopping 5,936,439 shares. What billionaires buy and sell isn't a bullish or bearish sign for individual investors, but it can be interesting to monitor the big movers.

In Microsoft's case, the nearly even buy-sell share total among the billionaires is a microcosm of the market's general sentiment, but which side of the fence should long-term investors fall on?

A final nail in the coffin
It was no secret that when out-going Microsoft CEO Steve Ballmer wrote a $7.2 billion check for Nokia's (NYSE:NOK) phone business a couple of years ago, incoming chief Satya Nadella was not impressed. So it wasn't surprising a year later when Nadella wrote off $7.6 billion for the Nokia business and laid off nearly 8,000 employees.

Last week's decision to write-off another $950 million and trim 1,850 additional positions -- the majority from Microsoft's Finland-based mobile unit -- finally puts an end to Ballmer's farewell present. The lack of success and uncertainty surrounding Microsoft's mobile efforts has almost certainly played a part in investor's -- billionaire or otherwise -- unwillingness to go all in.

With such a big change -- and one-time financial hit -- completed, it's not hard to understand why the Microsoft naysayers are either selling or opting to sit on the sidelines. But as so often happens, the lack of patience from some offers an opportunity for others with a longer investment horizon.

Image source: Microsoft.

Turning the page
Nadella's efforts to get Windows and its industry-leading suite of software into as many devices as possible, regardless of manufacturer or operating system, is already paying off. After accounting for currency, Office 365 sales grew 63% last quarter, Bing search ad revenue surged 18%, Microsoft's Dynamics CRM revenue jumped 9%, and its users more than doubled in fiscal 2016 Q3.

The successful roll out of Windows 10 played a key role in its software and search revenue, but Microsoft is also benefiting from making its bread-and-butter products iOS and Android compatible. That said, Microsoft has hedged its future on the fast-growing cloud market and getting its share of what is expected to become a market generating hundreds of billions in revenue.

Microsoft, just as with another tech behemoth betting on the cloud IBM (NYSE:IBM), is ideally positioned to make its mark in the cloud given its strong Software-as-a-Service (SaaS) offerings, along with its Azure platform. IBM delivered an annual run-rate of $5.4 billion in cloud SaaS sales last quarter, up 46% after accounting for currency. In total, IBM's cloud run-rate is now $10.8 billion annually.

Microsoft doesn't break out its SaaS cloud revenue, but considering its stellar Office 365 and Dynamics growth it's safe to say that like IBM, a healthy piece of its more than $10 billion annual run-rate is SaaS-related. One analyst recently suggested that Office 365, Dynamics, and Azure cloud sales will account for 30% of Microsoft's total revenue in just two years, compared to 11% in 2015.

In the trailing 12 months, Microsoft has generated $93.58 billion in revenue, meaning if the pundit proves correct, about $28 billion in sales will be cloud-related by 2018. For a lot of billionaires and individual investors with near-term perspectives, waiting for Microsoft to grow its cloud revenue isn't worth the time.

But with a 2.75% dividend yield, a forward price-earnings (P/E) ratio of a mere 18-less than half today's valuation of 40 -- and gaining traction in the cloud, the 10 billionaires that bought Microsoft shares got it right: assuming they and individual investors have time and patience.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.