Michael Dell Invests Like Warren Buffett; Top Holdings: DIN, SATS, TYL, WXS, SCHS
According to an article on this week’s Fortune magazine, Michael Dell’s personal investment is managed by MSD Capital. Since started in 1998, the firm has achieved a great track record. As of Oct. 2010, the firm has $12 billion under management.
MSD Capital invests in public equity, special opportunities, private equity, real estate and partnership.
In public equity investment, according to MSD website, "make long-term equity investments in a limited number of outstanding companies, both in the United States and abroad. We employ a disciplined, research-intensive analytic process in searching for businesses that possess sustainable long-term competitive advantages and are managed by honest, astute and shareholder-minded management teams. We firmly believe that businesses create wealth for their owners through the long-term generation of net free cash flow. Although we typically invest as a minority owner of publicly-traded companies, given the long-term perspective that we take when we make investments, we consider ourselves to be a partial owner of the businesses in which we invest. We focus on the absolute value of businesses, not their value relative to other "peer" companies or general stock market indices."
This paragraph can be summarized as this, the people at MSD Capital
1. Concentrate on a limited number of best companies
2. Invest in business that has sustainable long-term competitive advantages
3. And honest management team
4. Think like an owner
5. Focus on absolute value instead of relative value.
Therefore, MSD invests in a similar way that Warren Buffett has demonstrated and told us many times. It is not surprising Michael Dell’s investment team invests in this way. As a successful businessman, Michael knows how business works and what is the best for shareholders over long term.
Not accidentally, Bill Gates invests in the similar way too. It is not because he has close relationship with Warren Buffett and sits on the board of Berkshire Hathaway. It is because value investing itself is business investing. Just as Charlie Munger said, all investing is value investing. As the two best businessmen, both Bill Gates and Michael Dell understand this the best.
Now we have both Bill Gates and Michael Dell in our List of Gurus.
These are the top holdings of Michael Dell as of June 30, 2010. We should update his Q3 portfolio in the next week or so. If you would like to check the portfolio of Bill Gate, go here.
No. 1: DineEquity Inc. (DIN), Weightings: 12.73% - 2,512,356 Shares DineEquity Inc. develops, franchises, and operates full-service restaurant chains in the United States and internationally. Dineequity Inc. has a market cap of $938.7 million; its shares were traded at around $51.34 with a P/E ratio of 15.9 and P/S ratio of 0.7. Dineequity Inc. had an annual average earning growth of 14.5% over the past 10 years.
No. 2: EchoStar Corp. (SATS), Weightings: 12.71% - 3,671,129 Shares ECHOSTAR CORP is a publicly traded company. They intend to operate two primary businesses, a digital set-top box business and a fixed satellite services business. Echostar Corp. has a market cap of $1.8 billion; its shares were traded at around $21.65 with a P/E ratio of 6.2 and P/S ratio of 0.9.
No. 3: Tyler Technologies Inc. (TYL), Weightings: 11.41% - 4,049,923 Shares Tyler Corporation is a major provider of technology, software, data warehousing, electronic document management systems, information management outsourcing services, title plant and property records database information and other professional services for local governments andother enterprises. Tyler Technologies Inc. has a market cap of $712 million; its shares were traded at around $20.66 with a P/E ratio of 30.1 and P/S ratio of 2.5. Tyler Technologies Inc. had an annual average earning growth of 35.2% over the past 10 years. GuruFocus rated Tyler Technologies Inc. the business predictability rank of 4.5-star.
No. 4: Wright Express Corp. (WXS), Weightings: 9.36% - 1,737,327 Shares Wright Express is a provider of payment processing and information management services to the U. Wright Express Corp. has a market cap of $1.72 billion; its shares were traded at around $45.31 with a P/E ratio of 18.1 and P/S ratio of 5.2. Wright Express Corp. had an annual average earning growth of 2.9% over the past 5 years.
No. 5: School Specialty Inc. (SCHS), Weightings: 9.13% - 2,784,500 Shares School Specialty, Inc. is one of the largest marketers of non- textbook educational supplies and furniture to schools for pre-kindergarten through twelfth grade. School Specialty Inc. has a market cap of $260.1 million; its shares were traded at around $14.02 with a P/E ratio of 24.7 and P/S ratio of 0.3. School Specialty Inc. had an annual average earning growth of 3.7% over the past 10 years. GuruFocus rated School Specialty Inc. the business predictability rank of 2.5-star.
EVP / CFO Ploeg David Vander bought 1,000 shares of SCHS stock on 09/01/2010 at the average price of 13.25. Ploeg David Vander owns at least 21,424 shares after this. The price of the stock has increased by 5.81% since.