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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Frank E W who wrote (97170)	2/11/1999 8:25:00 AM
From: Mohan Marette	Respond to of 176387

Robert Palmer'....addicted to love'? No but close 'Addicted to DELL'? morning Frank: Say you know that song by Robert Palmer 'addicted to love'?..Pretty good song too but this what we talking about here is a bit different,read the article and you'll see. Quote: ""Dell serves as a model of efficiency and responsiveness in its industry. Unlike most of its competitors, the company. . .has a business model that continues to demonstrate superiority quarter after quarter." -Scott Schoelzel-Janus Twenty (Source:SmartMoney) ARCHIVE October 29, 1998 Addicted to Dell By Lewis Braham HABIT FORMING Source: Lipper Analytical Services, Inc. Data through Oct. 22. LIFE without Dell (DELL)? That would be like the St. Louis Cardinals without Mark McGwire. The Chicago Bulls sans Michael Jordan. Goldman Sachs absent Abby Cohen. It's no coincidence that three of the top five funds of the year (with more than $100 million in total assets) -- Fidelity Select Computers (FDCPX), Janus Twenty (JAVLX), and Idex Growth (TIDEX) -- are also three of the top ten largest holders of the super computer stock. With Dell up an incredible 207.8% year-to-date, winning fund managers have not only let their Dell stakes appreciate, but they've added to their positions. The No. 1 fund Fidelity Select Computers (up 47.2% year-to-date) has increased its stake from 7.2% last October to over 15.4% today. Meanwhile, Nos. 3 and 4 -- Janus Twenty and Idex Growth -- have upped the ante to 11.6% and 13.8% respectively. Even in No. 2 fund Rydex OTC (RYOCX), which passively indexes the Nasdaq 100, Dell's stake has grown like a weed. From 4.7% to 7.9% in the past six months. HOLD THE DELL Best 1998 Funds Top 5 Ret. W/ Dell* Top 5 Ret. W/out Dell* % Dell Invested Overall Ret. YTD Fidelity Sel Computer 89.1% 50.4% 15.4% 47.2% Rydex OTC 71.8 62.2 7.9 41.0 Janus Twenty 79.5 51.3 11.6 36.0 Idex Growth 71.0 38.9 13.8 30.2 Returns as of Oct. 29. *Top five based on semiannual reports issued nearest to Dec. 31, 1997. But what would life be like for these funds without their precious Dell? We decided to find out. After examining 1998's earliest semiannual reports for the funds, we tracked the performance of their top five stocks throughout the year. (Unfortunately, since many fund companies only report complete share data two to four times a year, this method leads to certain inaccuracies. But, if anything, our results underestimate Dell's impact because each fund has increased its position throughout the year.) The results prove that Dell is the clean-up batter in their lineups. For example, Fidelity Select Computers' Feb. 28 semiannual report indicates that the fund held 600,000 shares of Dell, 1,679,000 shares of EMC (EMC), 1,947,000 shares of Quantum (QNTM) and 1,064,600 shares of Compaq (CPQ). At the start of the year, those shares were worth a total of $191.5 million. As of Oct. 26, $362.1 million. Total return for the five: 89.1%. Without Dell: 50.4%. Dell's shares exploded in value from $50.4 million to $150 million. Similar results were found for Janus Twenty and Idex Growth. With Dell, Janus' top five had a 79.5% year-to-date return; without, 51.3%. Idex Growth's return difference was even more dramatic: with Dell, 71%; without, 38.9%. Scott Schoelzel, who manages both funds, acknowledged his indebtedness to the stock in Janus Twenty's April 30 semiannual report. He also pronounced his faith that the record-breaking performance will continue: "Dell serves as a model of efficiency and responsiveness in its industry. Unlike most of its competitors, the company. . .has a business model that continues to demonstrate superiority quarter after quarter." Manager Michael Tempero of Fidelity Select Computers sounds like he cribbed from Schoelzel in his latest report: "[Dell] operates a very efficient model for selling computers. What I mean by that is that Dell is often able to underprice its competitors." But with Dell currently selling at 78 times trailing 12-month earnings, one wonders when these fund managers will say enough is enough. "With Select Computers you sort of expect it because it is a computer fund," says Russel Kinnel, editor of Morningstar Mutual Funds. "Schoelzel at Janus operates a concentrated fund and has a history of letting his winners run. But that kind of attitude has driven up his P/E ratios. We've got a 48 average P/E on his fund. That's amazing! It's almost 50% higher than the average large-cap growth fund." And is Dell really worth it? "Dell has a strong brand name, but it doesn't quite have the lock on the market that Intel (INTC) and Microsoft (MSFT) have," notes Kinnel. Morningstar's Dell analyst Haywood Kelly echoes Kinnel: "Dell's in a commodity market with a lot of competition. If we have a recession, how recession proof is it? At its current valuation, I don't think it is." Although Dell has consistently beaten its earnings estimates for the past 12 quarters, maybe it's time for these overzealous fund managers to reconsider. Or at least reduce their positions. After all, even Mark McGwire can't carry the whole team.