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Michael Dell Invests Like Warren Buffett; Top Holdings: DIN, SATS, TYL, WXS, SCHS

November 06, 2010 | About:

We have just learned that Michael Dell has an investing strategy like Warren Buffett’s, and we have added him into our List of Gurus. This is the review of his investing philosophy and top holdings.

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. (NYSE: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. (NASDAQ: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. (NYSE: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.

About the author:

Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

Rating: 2.1/5 (8 votes)


Davethebooker - 7 years ago    Report SPAM
A Guru . He was just personally fined 4 million dollars by the sec. His companies was fined hundreds of millions. Intel was fined. Dell was found to be using credits from Intel to cook there profits and statements for the early years of 2000. Intel was paying dell to use there product and shut out A.M.D. The CFO of dell was fined too.

So Dell isnt a guru he uses MSD Capital. Dells fines where payed by investors in his company. And yeah Dell payed personally too.

So the owners had to pay for bad management and a greedy owner. That goes against everything that Warren Bufftet and Guru focus stand for. We want honesty , intergrity , people of good Chararcter.

Dell doesnt Qualify.

Yes I know that when the fines where paid , there was the ususal non admission of any wrong doing.

But when you pay a 4 million fine to the sec. It sends a strong message to us little folks.

And the message is this guy inst a guru. He is rich but who cares. Inside of him is a person of low moral character and the fines reveal that.

We already have enough gurus and everyone cant be one. Dell is a terrible choice of Guru.

Gurufocus premium member - 7 years ago
We added Michael Dell into the List of Premium Gurus, so his stocks will not show up to you if you don't add him into the your guru list.
Davethebooker - 7 years ago    Report SPAM
Well Michael Dell payed a 4 million personal fines. And dell payed 100 million of investor money to settle with the sec. And that was just the tip of the settlements associated with this. And people lost there jobs covering it up . Except Michael Dell . And you have him as a guru ? If he is premium that is even worse decision.

Making him premium is adding insult to injury. Rotten Decision. Very dissapointing.

You guys can do better. And I know you will.

Ben Graham and Phillip Fisher would be very unhappy with this decision too.

Gurufocus premium member - 7 years ago
Michael is certainly a smart businessman. MSD is run by good investors, and they have achieved good record. That is why we want to learn from the portfolio of MSD Capital.
AlbertaSunwapta - 7 years ago    Report SPAM
I'm curious - how many gurus were first identified when this site was started?

It now looks like there are over one hundred 'gurus' being tracked. That's interesting.
Gurufocus premium member - 7 years ago
There are about 100 investors tracked right now. Not everyone likes everyone of the gurus, but for free members, only the stocks from the default list of gurus, who are mostly deep value investors, are displayed in the Guru Trade pages. For premium members, they can choose from the complete list, and see the stock picks and portfolios of anyone they want.

Actually most of the recently added gurus are suggested by some of the premium members. We do not necessarily agree, but our arrangement makes it the way that it does not affect other users (both free and premium) even if we add more investors.
Davethebooker - 7 years ago    Report SPAM
Yes this is true. Then list the investment firm not Dell. He is out and out a crook.
Davethebooker - 7 years ago    Report SPAM
Dell my be smart but he isnt that intelligent. Like buffet said once. He was at a party and someone asked him " If your so rich how come your not smarter ". Buffet liked that. Buffet campaigns against bad , and greedy men like dell in the board rooms.. He cant standem. If that had been one of buffets ceos he would have fried him like he did salmons ceo of salomen.

Just because someone is rich and smart doesnt make them a Guru.

Guru moral fiber and backbone mean something. More than money. More than stock selections.

Now his investment firm seems to be bright. Find the gentlemen who runs the fund. And he is your Guru.

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