Bill Ackman, who oversees Pershing Square Capital Management, has a strong record of success. So when his firm takes a position in a stock, investors should take notice.

One of Pershing Square's biggest buys in this year's first quarter was Microsoft (MSFT +2.67%), and it loaded up on the stock. In Q1, Pershing purchased over $2 billion worth of Microsoft stock, and it now makes up more than 15% of the fund's total assets.

That's a huge move, but should investors follow suit? Let's take a look.

Microsoft's stock appears cheap

Every investor has their style, and Ackman's is more value-oriented. He tends to look for high-quality companies trading at a discount and holds them until they have reached full value. That's likely exactly what he's doing with Microsoft, since it's at historically low levels.

Microsoft has two factors affecting its net income metric, which play into the commonly used price-to-earnings valuation. Microsoft has made a ton of paper gains on its OpenAI investment, which it must report as a gain on investment in its net income calculation, even if it hasn't sold any shares.

It's also spending a ton on capital expenditures, which affects Microsoft's depreciation line. So, instead of using earnings, I think a more appropriate measure is operating cash flow, which measures how much cash a business generates each quarter. From this standpoint, Microsoft is among the cheapest it has been in nearly the past decade.

MSFT Price to CFO Per Share (TTM) data by YCharts

So, there's clearly value in Microsoft's stock. However, sometimes stocks sell off for good reasons, but Microsoft hasn't really had a good reason to sell off that I can see. Its earnings and growth have been strong, and it's doing just as well as many of its artificial intelligence (AI) hyperscaler peers. In Q1, its revenue rose 18% year over year, led by Azure, its cloud computing division. It also let investors know that its AI business had an annual run rate of $37 billion, rising at a 123% year-over-year pace.

With the stock cheap and delivering strong results, I think this represents an excellent buying opportunity for Microsoft stock, as it is very rare for Microsoft to trade at these levels. Having another investor like Bill Ackman backing Microsoft stock during its downturn should instill some confidence among investors, as he doesn't take a position in a stock for no reason.