
Michael Dell Gets $12B Richer with Break from Public Eye - walterbell
https://www.bloomberg.com/news/articles/2019-01-11/michael-dell-gets-12-billion-richer-with-break-from-public-eye
======
whack
> _Dell’s fortune is now $27 billion, according to the Bloomberg Billionaires
> Index, a ranking of the world’s 500 richest people, up from $15 billion in
> 2013._

If he had simply parked his money in a s&p 500 index with dividends
reinvested, his $15B would have grown to $26.6B. All without breaking a sweat
or exposing himself to concentrated risk.

His investment and turnaround of Dell was successful to be sure, but not
nearly as spectacular as the article seems to be implying.

~~~
parsnips
If Michael Dell "parked" his money in stocks over the last 5 years, the prices
would have been altered. Boards might have made different decisions, and his
liquidity might have been compromised. There's no way to guarantee that it
would have been a better result.

edit: Also my long standing challenge, point out the index fund billionaire.
We all want to meet that person who's winning so hard, by doing nothing.

~~~
Cyph0n
I honestly don’t understand why people think they can apply conventional
investment approaches to such vast amounts of money.

~~~
wbl
Because they can? Nevada's pension fund is run by one guy who parks it all in
Vanguard.

~~~
user5994461
The whole point of a pension fund is that you can only add money and never
take it back.

It doesn't work out if many people try to cash out.

~~~
parsnips
Nevada PERS is one of the worst examples as well, missing it's investment
targets over pretty much any period of time you can define.

~~~
wbl
Because its targets were quite high. CalPERS much higher fees missed its
similar assumptions.

------
asaph
> Dell announced it would become a public company again through a complex
> arrangement that involved buying back tracking shares for VMware, the
> software business that Dell owns an 80 percent chunk of. ...

> ... Taking over an existing listed stock allowed Dell to avoid the usual IPO
> process...

Huh? Can someone please explain this to me like I'm a 5 year old?

~~~
auspex
Big private company wants to trade shares publically but doesn't want to go
through the whole process of an IPO... so the big private company buys a
smaller publically traded company. Now big company has "merged" is a
publically traded company.

~~~
asaph
Is this considered a loophole in the system?

~~~
appleiigs
No, it’s a well known maneuver. Was popular in the past few years to reduce
taxes.

From an Washington Post article: “The idea behind the business maneuver,
called a corporate inversion, is simple: a U.S. company merges with a foreign
one and moves its headquarters abroad, avoiding the high U.S. corporate tax
rate of 35 percent on foreign income”.

~~~
tdhoot
To be clear, a corporate inversion is generally used to reduce taxes. I
believe when you're simply doing it to avoid the IPO process it's just called
a backdoor listing.

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untog
So, how long until all the progress they made while a private company is
ruined?

~~~
onetimemanytime
They'll go private again and emerge much richer. Financial engineering :)

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ui-explorer12
Yet another way the market is rigged against the main street investor.
Successful founders of this vintage love to build their company on public
money, then use their considerable leverage to take the company private after
dramatic growth. I wonder if Dell will live long enough to repeat the entire
process...

~~~
foota
Doesn't that benefit public investors though when the company is public?
Better than the company staying private through it all, right?

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jedberg
So he didn’t increase the value of the company that much, he just increased
his stake. Right?

~~~
aliswe
He increased the value of the company as well, as he diversified it and made
it "stronger". Also, he bought it from the public at a premium so they also
made good money off of it. And he also increased his stake, dunno how that
happened though ...

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petra
How much of this growth is from "financial engineering"?

------
gist
> The man who became famous selling computers more cheaply over a newish thing
> called the internet

As is well known Dell started this out of a dorm room in 1984 and was
successful and famous well before the Internet ...

~~~
jedberg
Their revenue and stock price was basically flat until 1996, when they
launched their website with direct sales on the web. Then their revenue
skyrocketed.

It's fair to say that they didn't really get famous until they started selling
on the internet in 1996.

~~~
gist
> It's fair to say that they didn't really get famous until they started
> selling on the internet in 1996

Simply (and with due respect) not true.

What are you defining as 'famous'? Michael Dell was definitely famous prior to
the internet.

Here is an article from the New York Times in 1992 (July 1992). Besides I
specifically remember him and stories about Dell from the 1980's. (I am
probably much older than you are is my guess..)

[https://www.nytimes.com/1992/07/05/business/the-executive-
co...](https://www.nytimes.com/1992/07/05/business/the-executive-computer-
michael-dell-says-he-s-more-than-ready-for-a-good-fight.html)

Further the article states that sales were 1.7 billion in 1992 (in 1992
dollars that is way more 'today').

