Feeds

Major Dell investor cashes in ALL of its 24.5 million shares

The Oakmark Funds spooked by Blackstone's withdrawal from bidding

Bridging the IT gap between rising business demands and ageing tools

Venture capitalist Blackstone's decision to withdraw from the bidding for Dell has spooked The Oakmark Funds into offloading its major stake in the Texan PC baron.

The group of mutual funds owned 24.5 million shares or a 1.4 per cent holding in Dell, making it the seventh largest investor.

Oakmark said yesterday that Blackstone's exit from any negotiations - it had valued Dell at $25bn - had dented the funds group's confidence in the estimated worth of the PC and server maker.

"We believed Blackstone had an information advantage compared to other potential bidders because the former head of Dell's merger and acquisitions team works at Blackstone," said William Nygren, portfolio manager at Oakmark.

He said Blackstone's valuation of Dell had centred on the large amount of capital the vendor had invested on transforming itself beyond a bog standard provider of commodity PCs into an enterprise tech giant.

"So we were surprised and disappointed when, after extensive due diligence of non-public information, Blackstone said that it was alarmed by Dell's rapidly deteriorating financial situation".

The PC market collapsed in Q1 - declining at a rate not seen in the two decades since Gartner and IDC began analysing the sector, and Dell was hurt badly.

Dell has spent $13.7bn on acquisitions of software, networking and services firms that ply their trade among large corporate customers, but a worry for the company is how to use those acquisitions to offset falling PC revenues, and find a foothold in tabs and smartphones.

This transformation into an enterprise player was supposed to take place away from the glare of Wall St, and part of the reason why the man Michael and VC pal SilverLake Partners bid $24bn for Dell the company.

That offer was branded "woefully inadequate" by Southeastern Asset Management, leading to rival bids being tabled by Blackstone and Icahn Enterprises.

Oakmark's Nygren said the funds group monitors the trades of corporate insiders and uses the summary statistics from acquisitions of entire businesses as metrics to judge the value of a commercial entity.

"Our numbers suggested Dell should be worth a premium to the $13.65 offer from management, but then a potential acquirer with access to non-public information decided to end its quest to acquire Dell at a higher price.

"Since they had information we didn't, we believed it was prudent to assume they might be right. So we sold our stock and will put the proceeds into other stocks that we are more confident are undervalued," said Nygren. ®

Application security programs and practises

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.