DELL - Dell Inc.

[Parsad]

Parsad, may I ask what strategy you used to lever up your exposure?

 

None.  We kept buying and buying to bring our average cost down.  We are up about 40% on it right now, and if it trades in the $14-15 range, we would finish up about 60-70%.  Cheers!

 

Shouldn't your average price then be about $8.75 - 8.82 to be up 60 - 70% when Dell trades in the $14-15 range?

8.75 * 1.6 = 14

8.82 * 1.7 =~ 15

(I'm ignoring the dividend now for simplicity)

I also did some averaging down, but my average cost is $10.5. You must have really exploited the lows of the past year to get this average price. Are there any tricks that you can share to get such results? TIA

 

Hi jmaes,

 

I was eyeballing it including dividends over the last six months.

 

We got it down to $9.22. 

 

Exact numbers, excluding dividends:

 

$13.10/$9.22 = 42%

$14.50/$9.22 = 57%

 

Cheers!

 

 

[PlanMaestro]

How a leveraged buyout could actually turn Dell into the tech success story of the decade

http://news.yahoo.com/leveraged-buyout-could-actually-turn-173049576.html

[jmaes]

We got it down to $9.22. 

 

Thanks for the reply. That's quite impressive imo.

[SI]

CNBC reporting price talk $13.50-14. Dell is stealing this company but like I said, where is the other bid going to come from. Congrats M. Dell.

[Parsad]

CNBC reporting price talk $13.50-14. Dell is stealing this company but like I said, where is the other bid going to come from. Congrats M. Dell.

 

Investors are not going to like that.  It won't get done at that price.  Cheers!

[enoch01]

CNBC reporting price talk $13.50-14. Dell is stealing this company but like I said, where is the other bid going to come from. Congrats M. Dell.

 

Investors are not going to like that.  It won't get done at that price.  Cheers!

 

Wow, Longleaf must be steamed.

[MVP444300]

CNBC reporting price talk $13.50-14. Dell is stealing this company but like I said, where is the other bid going to come from. Congrats M. Dell.

 

Investors are not going to like that.  It won't get done at that price.  Cheers!

 

 

My cost basis for Dell is $10.71 per share; while I wouldn't like the price of $13.50-$14 per share I'd definitely take it.  30% return isn't a bad return for 4 months. 

 

 

[MVP444300]

http://www.businessweek.com/news/2013-01-15/dell-seeks-buyout-to-end-public-scrutiny-25-years-post-ipo-tech#p2

 

Apparently Michael Dell entertained the idea of taking Dell private in 2010.

 

Michael Dell has floated the idea of a private Dell before. He told an audience in New York in 2010 that he’d entertained the idea, then declined to elaborate to the silent room.

 

Could intense scrutiny from Wall Street and shareholders be the primary reason they want to go private? 

 

Scrutiny Mounts

 

In going private, Dell could spend what it takes, and cut where it’s needed, to complete the transformation of Dell into a more nimble supplier of data-center gear. He could also consider another stab at the mobile market. Jettisoning PCs is one option. Still, desktops and laptops generate tens of billions of dollars in annual sales for Dell. That could be used to fund the enterprise expansion.

 

The company would also still be playing catch-up to competitors such as IBM and Oracle, which are more swiftly making the transition to cloud computing.

 

For all its troubles, Dell is still churning out almost a billion dollars in operating income (DELL) each quarter.

 

“The PC isn’t going away,” said Needham’s Kugele. “Companies that rely on Dell for PCs wouldn’t be happy with that. But they do need a better mobile strategy.”

 

Dell is also taking steps to increase the amount of high- margin storage and networking gear it sells alongside computer servers, a market where it’s gaining share. For that job, Dell in August hired president Marius Haas, a veteran of Hewlett- Packard who joined Dell after a yearlong stint at KKR & Co.

 

An LBO may nevertheless be in order.

 

“They’re under a lot of scrutiny” from shareholders, Sterne Agee’s Wu said. “Dell would be difficult to fix in a quarter-to-quarter environment.”

 

[A_Hamilton]

http://www.businessweek.com/news/2013-01-15/dell-seeks-buyout-to-end-public-scrutiny-25-years-post-ipo-tech#p2

 

Apparently Michael Dell entertained the idea of taking Dell private in 2010.

 

Michael Dell has floated the idea of a private Dell before. He told an audience in New York in 2010 that he’d entertained the idea, then declined to elaborate to the silent room.

 

Could be the reason the want to go private?  Wall Street is very focused on short-term metrics.

 

 

Scrutiny Mounts

 

In going private, Dell could spend what it takes, and cut where it’s needed, to complete the transformation of Dell into a more nimble supplier of data-center gear. He could also consider another stab at the mobile market. Jettisoning PCs is one option. Still, desktops and laptops generate tens of billions of dollars in annual sales for Dell. That could be used to fund the enterprise expansion.

 

The company would also still be playing catch-up to competitors such as IBM and Oracle, which are more swiftly making the transition to cloud computing.

 

For all its troubles, Dell is still churning out almost a billion dollars in operating income (DELL) each quarter.

 

“The PC isn’t going away,” said Needham’s Kugele. “Companies that rely on Dell for PCs wouldn’t be happy with that. But they do need a better mobile strategy.”

 

Dell is also taking steps to increase the amount of high- margin storage and networking gear it sells alongside computer servers, a market where it’s gaining share. For that job, Dell in August hired president Marius Haas, a veteran of Hewlett- Packard who joined Dell after a yearlong stint at KKR & Co.

 

An LBO may nevertheless be in order.

 

“They’re under a lot of scrutiny” from shareholders, Sterne Agee’s Wu said. “Dell would be difficult to fix in a quarter-to-quarter environment.”

 

The question to me isn't whether Michael Dell should/shouldn't take this private. The question is why do I get f*ed as a shareholder in this thing when DELL gives the company away as opposed to issuing debt and repoing shares so that I can own more of the company. DELL's board is doing horribly by shareholders if they accept $13.50-$14.

 

[A_Hamilton]

http://www.businessweek.com/news/2013-01-15/dell-seeks-buyout-to-end-public-scrutiny-25-years-post-ipo-tech#p2

 

Apparently Michael Dell entertained the idea of taking Dell private in 2010.

 

Michael Dell has floated the idea of a private Dell before. He told an audience in New York in 2010 that he’d entertained the idea, then declined to elaborate to the silent room.

 

Could intense scrutiny from Wall Street and shareholders be the primary reason they want to go private? 

 

Scrutiny Mounts

 

 

 

In going private, Dell could spend what it takes, and cut where it’s needed, to complete the transformation of Dell into a more nimble supplier of data-center gear. He could also consider another stab at the mobile market. Jettisoning PCs is one option. Still, desktops and laptops generate tens of billions of dollars in annual sales for Dell. That could be used to fund the enterprise expansion.

 

The company would also still be playing catch-up to competitors such as IBM and Oracle, which are more swiftly making the transition to cloud computing.

 

For all its troubles, Dell is still churning out almost a billion dollars in operating income (DELL) each quarter.

 

“The PC isn’t going away,” said Needham’s Kugele. “Companies that rely on Dell for PCs wouldn’t be happy with that. But they do need a better mobile strategy.”

 

Dell is also taking steps to increase the amount of high- margin storage and networking gear it sells alongside computer servers, a market where it’s gaining share. For that job, Dell in August hired president Marius Haas, a veteran of Hewlett- Packard who joined Dell after a yearlong stint at KKR & Co.

 

An LBO may nevertheless be in order.

 

“They’re under a lot of scrutiny” from shareholders, Sterne Agee’s Wu said. “Dell would be difficult to fix in a quarter-to-quarter environment.”

 

Also, who cares if the company is private or public in terms of where DELL can go operationally. Michael Dell owns 15% of the company, no one is going to kick him out. The company doesn't need to access equity markets, so he could shut down IR to be nothing more than quarterly Q's and annual K's and let the numbers speak for themselves. Going private, what a bunch of hocus pocus to rip off shareholders. 

 

[alwaysinvert]

Parsad, may I ask what strategy you used to lever up your exposure?

 

None.  We kept buying and buying to bring our average cost down.  We are up about 40% on it right now, and if it trades in the $14-15 range, we would finish up about 60-70%.  Cheers!

 

Shouldn't your average price then be about $8.75 - 8.82 to be up 60 - 70% when Dell trades in the $14-15 range?

8.75 * 1.6 = 14

8.82 * 1.7 =~ 15

(I'm ignoring the dividend now for simplicity)

I also did some averaging down, but my average cost is $10.5. You must have really exploited the lows of the past year to get this average price. Are there any tricks that you can share to get such results? TIA

 

Hi jmaes,

 

I was eyeballing it including dividends over the last six months.

 

We got it down to $9.22. 

 

Exact numbers, excluding dividends:

 

$13.10/$9.22 = 42%

$14.50/$9.22 = 57%

 

Cheers!

That's amazing. I think I bought in roughly the same period (starting late September) and my avg is $9.43 and I thought I was quite lucky on the timing part. Still holding onto all my shares though and I probably will until this plays itself out or approaches 90% of IV. I have no immediate alternative use to consider.

[MVP444300]

http://www.businessweek.com/news/2013-01-15/dell-seeks-buyout-to-end-public-scrutiny-25-years-post-ipo-tech#p2

 

Apparently Michael Dell entertained the idea of taking Dell private in 2010.

 

Michael Dell has floated the idea of a private Dell before. He told an audience in New York in 2010 that he’d entertained the idea, then declined to elaborate to the silent room.

 

Could intense scrutiny from Wall Street and shareholders be the primary reason they want to go private? 

 

Scrutiny Mounts

 

 

 

In going private, Dell could spend what it takes, and cut where it’s needed, to complete the transformation of Dell into a more nimble supplier of data-center gear. He could also consider another stab at the mobile market. Jettisoning PCs is one option. Still, desktops and laptops generate tens of billions of dollars in annual sales for Dell. That could be used to fund the enterprise expansion.

 

The company would also still be playing catch-up to competitors such as IBM and Oracle, which are more swiftly making the transition to cloud computing.

 

For all its troubles, Dell is still churning out almost a billion dollars in operating income (DELL) each quarter.

 

“The PC isn’t going away,” said Needham’s Kugele. “Companies that rely on Dell for PCs wouldn’t be happy with that. But they do need a better mobile strategy.”

 

Dell is also taking steps to increase the amount of high- margin storage and networking gear it sells alongside computer servers, a market where it’s gaining share. For that job, Dell in August hired president Marius Haas, a veteran of Hewlett- Packard who joined Dell after a yearlong stint at KKR & Co.

 

An LBO may nevertheless be in order.

 

“They’re under a lot of scrutiny” from shareholders, Sterne Agee’s Wu said. “Dell would be difficult to fix in a quarter-to-quarter environment.”

 

Also, who cares if the company is private or public in terms of where DELL can go operationally. Michael Dell owns 15% of the company, no one is going to kick him out. The company doesn't need to access equity markets, so he could shut down IR to be nothing more than quarterly Q's and annual K's and let the numbers speak for themselves. Going private, what a bunch of hocus pocus to rip off shareholders.

 

I'm not happy with the price either if the plan does go through to take it private, I'd rather for the company to stay public and agree with you they should be buying back more shares currently to increase our ownership. 

 

I simply posted the article as possible reasons they maybe wanting to go private. 

[A_Hamilton]

http://www.businessweek.com/news/2013-01-15/dell-seeks-buyout-to-end-public-scrutiny-25-years-post-ipo-tech#p2

 

Apparently Michael Dell entertained the idea of taking Dell private in 2010.

 

Michael Dell has floated the idea of a private Dell before. He told an audience in New York in 2010 that he’d entertained the idea, then declined to elaborate to the silent room.

 

Could intense scrutiny from Wall Street and shareholders be the primary reason they want to go private? 

 

Scrutiny Mounts

 

 

 

In going private, Dell could spend what it takes, and cut where it’s needed, to complete the transformation of Dell into a more nimble supplier of data-center gear. He could also consider another stab at the mobile market. Jettisoning PCs is one option. Still, desktops and laptops generate tens of billions of dollars in annual sales for Dell. That could be used to fund the enterprise expansion.

 

The company would also still be playing catch-up to competitors such as IBM and Oracle, which are more swiftly making the transition to cloud computing.

 

For all its troubles, Dell is still churning out almost a billion dollars in operating income (DELL) each quarter.

 

“The PC isn’t going away,” said Needham’s Kugele. “Companies that rely on Dell for PCs wouldn’t be happy with that. But they do need a better mobile strategy.”

 

Dell is also taking steps to increase the amount of high- margin storage and networking gear it sells alongside computer servers, a market where it’s gaining share. For that job, Dell in August hired president Marius Haas, a veteran of Hewlett- Packard who joined Dell after a yearlong stint at KKR & Co.

 

An LBO may nevertheless be in order.

 

“They’re under a lot of scrutiny” from shareholders, Sterne Agee’s Wu said. “Dell would be difficult to fix in a quarter-to-quarter environment.”

 

Also, who cares if the company is private or public in terms of where DELL can go operationally. Michael Dell owns 15% of the company, no one is going to kick him out. The company doesn't need to access equity markets, so he could shut down IR to be nothing more than quarterly Q's and annual K's and let the numbers speak for themselves. Going private, what a bunch of hocus pocus to rip off shareholders.

 

I'm not happy with the price either if the plan does go through to take it private, I'd rather for the company to stay public and agree with you they should be buying back more shares currently to increase our ownership. 

 

I simply posted the article as possible reasons they maybe wanting to go private.

 

Didn't mean to make my rant a shot at your post MVP. Rather, I'm regularly frustrated by the fact that media seems to think there is some magic done in the PE world that can't be done in a wide open public company.

[boilermaker75]

http://www.businessweek.com/news/2013-01-15/dell-seeks-buyout-to-end-public-scrutiny-25-years-post-ipo-tech#p2

 

Apparently Michael Dell entertained the idea of taking Dell private in 2010.

 

Michael Dell has floated the idea of a private Dell before. He told an audience in New York in 2010 that he’d entertained the idea, then declined to elaborate to the silent room.

 

Could be the reason the want to go private?  Wall Street is very focused on short-term metrics.

 

 

Scrutiny Mounts

 

In going private, Dell could spend what it takes, and cut where it’s needed, to complete the transformation of Dell into a more nimble supplier of data-center gear. He could also consider another stab at the mobile market. Jettisoning PCs is one option. Still, desktops and laptops generate tens of billions of dollars in annual sales for Dell. That could be used to fund the enterprise expansion.

 

The company would also still be playing catch-up to competitors such as IBM and Oracle, which are more swiftly making the transition to cloud computing.

 

For all its troubles, Dell is still churning out almost a billion dollars in operating income (DELL) each quarter.

 

“The PC isn’t going away,” said Needham’s Kugele. “Companies that rely on Dell for PCs wouldn’t be happy with that. But they do need a better mobile strategy.”

 

Dell is also taking steps to increase the amount of high- margin storage and networking gear it sells alongside computer servers, a market where it’s gaining share. For that job, Dell in August hired president Marius Haas, a veteran of Hewlett- Packard who joined Dell after a yearlong stint at KKR & Co.

 

An LBO may nevertheless be in order.

 

“They’re under a lot of scrutiny” from shareholders, Sterne Agee’s Wu said. “Dell would be difficult to fix in a quarter-to-quarter environment.”

 

The question to me isn't whether Michael Dell should/shouldn't take this private. The question is why do I get f*ed as a shareholder in this thing when DELL gives the company away as opposed to issuing debt and repoing shares so that I can own more of the company. DELL's board is doing horribly by shareholders if they accept $13.50-$14.

 

I don't like the price either. There will definitely be a lawsuit if he steals it at $13.50-14.00.

[txlaw]

Hmm, if the price turns out to be between $13.5 to $14, then I will have to admit that I was dead wrong on Michael Dell not stealing the company. 

 

Even $16 is a steal for DELL, IMO. 

[Parsad]

Hmm, if the price turns out to be between $13.5 to $14, then I will have to admit that I was dead wrong on Michael Dell not stealing the company. 

 

Even $16 is a steal for DELL, IMO.

 

I suspect the offer comes in at $14 based on the rumors, and then you have shareholders fight for $15.50-16.  Shareholders feel somewhat vindicated by the slightly higher offer, and Michael Dell gets it taken private for a pretty good price nicely under intrinsic value.  Cheers!

[stahleyp]

If the offer comes in at 16, that looks to be a bit more than breakeven on Longleaf's option trades for DELL.

 

http://www.bloomberg.com/news/2011-03-01/mason-hawkins-swaps-dell-shares-for-options-to-add-leverage-to-longleaf.html

 

 

"Longleaf paid $213 million for the options, or about $8.52 a share"

 

"The fund’s options are known as “in the money,” because they permit Longleaf to buy Dell shares for $7 each,"

[rogermunibond]

The FT mentions that Temasek, Calpers, and the Canadian Pension Plan Investment Board are all in discussions wih Silver Lake to come in as investors alongside the private equity guys and Michael Dell.  I think an offer above $14 per share may be highly dependent on how much these other investors put in or if they walk away from the deal.

[boilermaker75]

The 12-strike February puts were bid at $0.41 at the end of the day yesterday. If they are >$0.40 this morning I am going to write some. So even if the deal falls through within a month, and I get put to at $11.60, I figure I get DELL at a good price. If they expire I make about 3.4% in one month.

 

I like playing these buy-out/merger arbitrages using options. By writing puts I determine when the play ends, in this case February 16, rather then waiting indefinitely for the deal to close if I were to just buy the stock.

[Uccmal]

Dell is going to have to deal with some pretty tough shareholders here. 

 

I suspect they either have to really pony up or include Southeastern and FFH as partners. 

 

Unless they get buy in from those partners I cant see the price staying this low.  You can bet FFH/SE is on the phones with the other shareholders working deals as we speak.

[zippy1]

Dell is going to have to deal with some pretty tough shareholders here. 

 

I suspect they either have to really pony up or include Southeastern and FFH as partners. 

 

Unless they get buy in from those partners I cant see the price staying this low.  You can bet FFH/SE is on the phones with the other shareholders working deals as we speak.

FFH probably can hold shares in a private company, but I assume SE's mutual funds cannot hold shares in a private company, right?

[Uccmal]

Dell is going to have to deal with some pretty tough shareholders here. 

 

I suspect they either have to really pony up or include Southeastern and FFH as partners. 

 

Unless they get buy in from those partners I cant see the price staying this low.  You can bet FFH/SE is on the phones with the other shareholders working deals as we speak.

FFH probably can hold shares in a private company, but I assume SE's mutual funds cannot hold shares in a private company, right?

 

FFH can for sure.  No idea about SE.  Chou holds private companies in his US fund.

[rogermunibond]

FFH holds 8.9 million shares according to their last 13F, which is less than 1%.  Southeastern will be the one to watch.

[Uccmal]

FFH holds 8.9 million shares according to their last 13F, which is less than 1%.  Southeastern will be the one to watch.

 

Sorry my bad.  300m of 22b is not a large sum from the dell side.  I suppose Ffh will just sell and redeploy elsewhere.

[txlaw]

SEAM in the news because of DELL:

 

http://www.businessweek.com/news/2013-01-16/dell-buyout-to-test-hawkins-buy-and-hold-math-after-drop