MSD Capital LP was set up to manage Dell's capital as well as his family's. It is primarily an investment firm engaged in the following:
- Publicly traded securities
- Traditional private equity activities
- Real estate
- Special opportunities
- Selectively investing with established third-party managers in the private and public markets
However, MSD Capital also performs other investment activities and invests in a wide variety of assets. Its primary purpose is to build a portfolio with long-term capital appreciation.
Here are some of his top holdings:
DineEquity (DIN): DineEquity is engaged in the food industry. It franchises and operates two restaurants: IHOP, specialized in pancakes and breakfast with an average check around $9-$10 and Applebee's, which is a bar and grill chain that offers lunch and dinner menus at an average of $12 to $13.
The company has recently started to sell its units to franchisees to free up capital. It has particularly sold Applebee's restaurants as IHOPs are almost all franchisee operated (99% of them). Apart from the franchise, the company has made other significant changes. One of them is the change in the look of Applebee's restaurants and more emphasis on higher margins at the Applebee's restaurants it owns. The purpose of these changes is to use capital to repay debt and probably start paying out dividends to shareholders. This last element must have been used by Michael Dell to invest. Furthermore, the Applebee's restaurant sales are growing and they will certainly reverse the recent problems the company has gone through.
DinEquity Inc. is now trading at about $45.67. The price/earnings growth ratio is 0.90 and price to book is very high at 10.34. Return on equity is -1.97%. Quarterly year-over-year revenue growth is down 21.20% and quarterly year-over-year earnings growth is up 15.30%. The current ratio is 1.21.
Domino (DPZ): DPZ is engaged in domestic pizza delivery. Its revenue is primarily driven by franchise royalties, stores and sales. It operates 17 manufacturing and supply-chain centers. The company operates in 60 countries worldwide. In 2008, Domino posted $5.5 billion in system-wide retail sales. In 1998, Mitt Romney´s old firm, Bain Capital bought Domino's for about $1 billion and then it went public in 2004. In 2010, the company hired CEO Patrick Doyle to refresh the company's image.
Domino's started to make good pizza again thus recording quarterly gains of 14%, which are considered the highest in a fast-food restaurant chain.
Domino's currently has a P/E ratio of 21 and a forward P/E ratio of just over 17. Over the last four quarters, the average P/E ratio of the stock has ranged between 9 and 21. Over the last seven years, Domino's has an average P/E ratio of 14.35. I think Michael Dell invested in the company not only because of its quarterly results but because it is committed to continue growing.
Macquarie Infrastructure Company (MIC): Macquarie Infrastructure Company owns, operates, and invests in a diversified group of infrastructure businesses primarily in the United States. The businesses include airport refueling, automobile parking, water cooling and gas distribution. This type of business is traditionally owned by governments and private investors.
In terms of performance, IMTT was outstanding. It reported a year-over-year increase in free cash flow of 53%. Michael Dell saw that the company is receiving strong demand for storage and increasing capacity utilization. Furthermore, MIC recently traded at $20.21.The company gained 38.14% during the past 12 months and has a market cap of $0.9 billion, P/E ratio of 42.1 and estimated EPS growth over the next five years at 14%.
EchoStar Corporation (SATS): EchoStar Corporation is made up of two sectors: the Digital Set-Top Box Business, which designs, develops and distributes digital set-top boxes and related products and technology and the Satellite Services Business, which uses its orbit satellites and related FCC licenses to lease capacity to enterprise, broadcast news and government organizations. There are two satellites currently under construction, EchoStar 16 and Jupiter-1. The former is scheduled for launch in 2012 and it will be leased to DISH Network and the former is scheduled for launch at the beginning of 2012. In this case, the spacecraft thermal black testing is in process. The purpose of Jupiter is to enhance Hughe's net consumer subscriber broadband Internet service in North America and provide services to future corporate customers.
Financially speaking, the company has revenues of $2.44 billion, and had 42.2% year-over-year growth in its most recent quarter. It generated $2.14 diluted EPS, giving it a P/E of 10.65. It also holds $1.44 billion in cash on its balance sheet. Furthermore, its book value per share is $34.79. The company also holds $2.4 billion in total debt on its balance sheet and a debt/equity ratio of 79.37. Michael Dell decided to invest in SATS because it is financially healthy, it is currently developing new initiatives and above all, it has the ability to pay its debt before investing.
Wright WXS: Wright provides fleet-management products and services to government agencies and companies throughout the U.S. Wright's charge card is its primary revenue driver and fleet-management tool. Customers use the card to purchase fuel and maintenance services at locations across the country. Its network is wide-ranging.
Why did Michael Dell invest in the company? WXS has a promising outlook for growth. According to estimates, the share market is a little less than 10% of all fleet vehicles across the U.S. and management considers that nearly two-thirds do not use a fleet card. The firm generally focuses on all types of fleet, but in particular its product is targeted at smaller fleets which are less aware of the benefits the fleet card products render. This is a good strategy because smaller fleets have less bargaining power and most importantly, there is less competition in the industry.
WXS returned 14% year to date, and has a 14.77 forward P/E. The stock pays no dividend and its EPS is expected to grow by 13% annually over the next five years.