Dell Technologies Class V: What’s The Right Discount?

Jacob Ma-Weaver presented his in-depth investment thesis on Dell Technologies Class V (NYSE: DVMT) at Best Ideas 2017.

Dell Technologies Class V is a tracking stock created to finance Dell’s acquisition of EMC, which owned over 80% of VMware (NYSE: VMW). DVMT contractually reflects the economic performance of VMW shares held by Dell; however, DVMT trades at a more than 30% discount to VMW. VMW is an attractive asset in its own right at the recent price, and DVMT represents an intriguing way to purchase VMW at a discount in exchange for accepting governance and credit risk at Dell. Jacob’s lays out a novel theoretical framework for the appropriate tracking stock discount and argues that DVMT discounts far more credit risk than the rest of Dell’s capital structure.

About the instructor:

Jacob Ma-Weaver worked in corporate, long-only, and long/short contexts prior to founding Cable Car. With more than seven years of investment-related professional experience and a lifelong interest in investing, Jacob is an experienced financial analyst and market participant. Jacob began his career as a Corporate Finance Business Analyst in the Corporate Performance Center at McKinsey & Company in New York before moving to San Francisco, where he helped cover global retail and telecom companies at Dodge & Cox, a $200 billion mutual fund known for its value orientation. Jacob was later employed as a generalist long/short analyst at Amici Capital, formerly known as Porter Orlin, one of the original Jones-model hedge funds founded in 1976. Jacob graduated from Columbia University with a BA in Comparative Literature & Society and Economics, cum laude, and an MA in Statistics. He is fluent in German and proficient in Mandarin Chinese. Jacob is also a CFA charterholder.

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