Dell Technologies (DELL) Has Risen 35% in Last One Year, Outperforms Market

If you are looking for the best ideas for your portfolio you may want to consider some of Horizon Kinetics top stock picks. In its Q2 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Dell Technologies Inc. (NYSE:DELL) stock. Dell Technologies Inc. (NYSE:DELL) is a computer technology company that develops, sells, repairs, and supports computers and related products and services.

In July 2019, Horizon Kinetics had released its Q2 2019 investor letter. Dell Technologies Inc. (NYSE:DELL) stock has posted a return of 35.0% in the trailing one year period, outperforming the S&P 500 Index which returned 16.0% in the same period. On a year-to-date basis, Dell Technologies Inc. (NYSE:DELL) stock has risen by 32.7%.

Let’s take a look at comments made by Horizon Kinetics about Dell Technologies Inc. (NYSE:DELL) stock in the Q2 2019 investor letter.

“Dell made its fortune disrupting incumbent personal computer makers by employing a lower-cost, directto-consumer sales model, and by being willing to sustain a low margin. It is in the process of trying to repeat this strategy. This is through its 64% ownership stake in Pivotal Software Inc. (PVTL), a newly public subsidiary that has a $2.7 billion market capitalization. Its mission is to capture market share in cloud computing by underselling the competition, such as Amazon and Microsoft. It has only $657 million of annual revenue, so obviously it is much smaller than the Amazon and Microsoft cloud divisions, but it has grown by 134% cumulatively in the past 36 months. Pivotal Software operates at a loss. It is fairly wellcapitalized and certainly would have access to more capital if required. Consequently, the transformation of cloud computing into a low margin commodity-type business has already commenced, albeit, at a very low level.

If Dell is willing to challenge Amazon and Microsoft in cloud services and gain market share by relentless price competition, there is every reason to believe that Dell or perhaps some other firm would challenge Apple with an inexpensive smartphone. After all, LM Ericsson and Nokia once dominated the cell phone business and these firms were displaced, just as Dell displaced Hewlett-Packard. The current internet beneficiary incumbents have stratospheric profit margins. What if Dell were to enter the smartphone sector with a production approach that turns such phones into a low-margin proposition? What would be the impact on Apple?”

Pixabay/Public Domain

In Q2 2020, the number of bullish hedge fund positions on Dell Technologies Inc. (NYSE:DELL) stock increased by about 28% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with Dell’s growth potential. Our calculations showed that Dell Technologies Inc. (NYSE:DELL) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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Disclosure: None. This article is originally published at Insider Monkey.