Sum of the parts stories. Legacy PC makers. Investing with Michael Dell. Those are three things that, over the past decade, have caused investors heartburn.
Thomas Lott published a top idea last week that comes out tomorrow on Dell (DELL) which combines each of those elements. The combination of the legacy Dell business, its acquired EMC business, and the 80.6% stake in VMWare (VMW) makes for a compelling value, he argues. And yet, he's not the first to make that argument, and DELL has languished meanwhile.
We speak with Thomas about his thesis and how this sort of thing can go wrong, as well as why he thinks it won't here. We get into the importance of a pending catalyst, of the persistent discount around DELL and EMC, and the strength of VMWare's business.
Topics covered:
3:20 minute mark - Summing up the simple sum of the parts thesis for Dell 8:30 - Owning VMW straight up vs. recreating it via DELL 11:30 - This discount has been here before - what's going to make that change? 15:30 - Looking at cloud pressures on EMC and VMW's business 21:00 - What gives you confidence in Michael Dell? 27:30 - Breaking down sum of the parts investing 30:30 - Spotting incentives in a thesis 36:30 - Where Dell fits into a compounding investing style