Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (74800)	1/7/2024 11:47:23 AM
From: Harshu Vyas	Respond to of 78482

Think some of those numbers are wrong. Dell has no book value (at all!) so cannot have a positive ROE. They run both an equity and working capital deficit. As for HPQ, Buffett got it wrong. Simple as that. Since 2021, net earnings have halved and revenues are down by 14%... hence, it's no surprise he's getting out. Dell hasn't suffered nearly as much as HP. If we want to consider leadership... Lores joined HP as an intern in the late eighties and rose up through the ranks, but does he make a good CEO? Often, you find that these "leaders" having done all the hard work and schmoozing, aren't cut out to take control of a company. I really don't think Lores has the ability to revamp HP's business. AND Lores has sold about $2m worth of stock in the last 3mo. Realise that he also owns less than $30m in stock... but took home close to $3m in cash comp last year (over $20m with stock comp and options). Michael Dell, otoh, at 19 founded Dell with $1000, took it public, took it private and then took it public once more battling off (and beating) Icahn twice and remains a majority shareholder. Took home $3m last year and doesn't take stocks awards. I know exactly who I prefer. As a kid, Jobs was my hero but as I got older, I realised Dell was heavily underrated. Is investing in your heroes a bad idea? Best, Harshu Vyas OT - Never liked Apple under Tim Cook because he just widened the moat and innovation has been lacking. Great. But not in the spirit of Jobs' Apple. And with AI, who knows how long Apple survives? Will people care for smartphones ten years from now? That moat that's been protected so dearly may mean very little. As my dad often reminds me, the iPhone was a game-changer and that was when Apple's future really brightened. That changed life and how people viewed smartphones (the first smartphone was made in '92). Will Apple get Appled and become an IBM or Xerox?

To: E_K_S who wrote (74800)	1/7/2024 12:03:49 PM
From: Sean Collett	2 Recommendations Recommended By E_K_S JohnyP Read Replies (1) \| Respond to of 78482

It is important to note that a high ROE is not a good measure to use when looking at a company with high debt though. So while BARD may give this in DELLs favor, I think it also is not considering the fact that the debt is itself high and then one can assume inflating your figure - especially looking at the equity situation. And while I agree the DFS debt is separate they do have $1B in aging with $868M 1-90 days past due and $136M >90 days. In their April 2022 10-Q they only had $585M in this bucket so that is growing. Meanwhile the total debt here has not really changed much as it was $10.2B in April 2022 and now $10.3B in their recent 10-Q. ROIC would be a potentially better metric to use in this situation given the leverage in both situations (DELL & HPQ). Looking at annual figures: ROIC for DELL is 15.41% vs. HPQ at 45.63%. And if we look at the inverse of the P/E (earnings yield) we see Dell offers a 4.94% vs. HPQ of 10.99%. I don't think the question here is Dell a bad company. It is not (that FCF is very nice). I think the question is what is the intrinsic value of the stock and when can we estimate it may achieve that value? January 7th, 2022 it traded at $57.99/s and today it is at $75.84/, it was just trading at $23.47/s on January 7th, 2019. It is at the highest levels it has traded at in it's history from what I can tell, so is there more room here? Is the server space going to see further growth as the cost of financing has risen so much? Mr. Market is full of surprises, but I would say the margin of safety is not too strong at the current share price. -Sean