Thursday, October 23, 2008

Bought A Little Dell Stock

Just bought Dell Computer at $11.83 per share.

With its recent steep decline, it now sports only a $23 billion market capitalization. They have $9 billion in cash on the books and very little debt ($2 billion).

Even if they only earn $1 per share next year (beneath the $1.46 consensus estimate) this stock is trading CHEAP.

I think it's fairly safe to buy some and forget about it for a while.


Taylor Conant said...

So DELL fell almost 50%? What was the reason for that? And what makes you think the shares will recover in the short term? Won't discretionary consumer spending on PCs suffer as the downturn worsens and commercial office real estate space continues to dry up?

Or do you think DELL will capture a greater percentage of remaining marketshare because they cater to "cheap" demographics?

Or do you just think the selloff was unjustified?

Curious what your reasoning was on this one

Funny Circus Bears said...

Looks cheap for the buy and hope port.

Plus you could sell the nov12 calls and lower your cost basis another 1.17.

CaptiousNut said...

Yeah, volatility is *fat*. I like that idea. But I'd only sell them on a quick bounce.

CaptiousNut said...


Stock is cheap, IMO. That's all I need.

I will say that Dell has little competition, negligible debt and inventory, and an advanced business model. None of this is *news* though.

Forget about why it fell. That's not germane. You can safely guess that it fell with a market that's down 40% from its peak, no?

Yes, Dell should do somewhat better than Apple in a weaker economy b/c of their lower price point. Just like McDonalds and Walmart are thriving right now.

But the reason I bought is because I think the market has a tradable bounce in it. I start with that premise and then look for stuff that I like to buy.

CaptiousNut said...

Sold the Nov 13s for 92 cents against the stock.

Thanks fcb, I wasn't even thinking about covering this position until you suggested it!

It's definitely the right thing to do with volatility this high.