Stockpickr Snapshot: Microsoft

As every investor now knows, Microsoft(MSFT Quote - Cramer on MSFT - Stock Picks) blew away earnings expectations Thursday morning. So I looked at Stockpickr portfolios to see if there were clues to the potential here.

The company reported that its third-quarter profits were boosted by a strong showing from its new operating system, Windows Vista. The company also offered solid guidance on 2007 and 2008, which led to two analyst upgrades, including a new $36 price target.

But rather than look back wistfully, let's figure out if we could have seen this coming. Several things pointed to this ahead of time. Despite CEO Steve Ballmer's comments about Vista that caused a healthy pullback in the stock a short while ago, there were a few different indicators that would have allowed us to capitalize on this earnings report. In particular, I took note of the fact that that short interest in Microsoft went up more than 4% (4.3 million shares) in April, just as the software giant was entering its strongest product cycle in 10 years.

Here are some Stockpickr portfolios that provided a backdrop to the Microsoft earnings report. It might be interesting to examine the other stocks in these lists to identify similar opportunities.

Nasdaq short interest: Microsoft had 98.8 million shares short in the April report. These shorts are all scrambling to cover in the wake of MSFT's good news. Other stocks on this list include Sirius(SIRI Quote - Cramer on SIRI - Stock Picks) coming in at No. 1 with 120.4 million shares and Level 3(LVLT Quote - Cramer on LVLT - Stock Picks) with 108.4 million shares sold short.

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