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, founder of the tech giant Dell Inc., is one of the richest
people in the world, with a net worth in excess of $14 billion.
He manages his personal wealth through MSD Capital, which invests
in public equity, private equity and real estate.
started MSD in 1998 as a family office in an effort to diversify
his wealth beyond the computer company Dell. MSD Capital runs a
niche portfolio that is heavily concentrated; this includes
having over 85% of his total funds invested in the top four
stocks. Let's have a look at
's top picks for last quarter. [/size]
MSD Capital's Top Picks
top stock holding
at the end of 2012, with over
32% of the fund
invested in the company. DineEquity owns and operates two
restaurant chains, Applebee's Neighborhood Grill and
International House of Pancakes (IHOP). DineEquity has a robust
return on equity of 37%, compared to an industry average of 20%.
What's more is that its net profit margin of 15% is high compared
to an industry average of 5%. DineEquity pays a 4.23% dividend
yield and trades at a mere 10.7 times earnings, making the stock
a value and income play (read more about why).
Asbury Automotive Group, Inc.
and makes up
20% of the
firm's public equity portfolio. Asbury is one of the largest
automotive retailers in the United States. Asbury posted fourth
quarter earnings of $0.72 per share, versus $0.55 from the same
quarter last year and beating consensus of $0.65 handily. As
well, earnings before interest and taxes beat consensus estimates
by 5%. Asbury did suspend its dividend in 2008 in an effort to
boost its cash position, but boding well for Asbury is the
S&P's expected increase in U.S. light vehicle sales to 15.4
million units in 2013, up from 14.4 million in 2012.
fourth largest holding
and makes up
17.5% of the fund's portfolio
. PVH has a diversified portfolio of iconic brands including
Calvin Klein, Tommy Hilfiger and Van Heusen. The stock is up over
30% during the past twelve months, mainly due to its planned
acquisition of The Warnaco Group. The acquisition will unite the
Calvin Klein brand under one roof. Other Warnaco brands include
Speedo, Chaps, Warner's and Olga. Meanwhile, the company exited
its Izod women's and Timberland wholesale sportswear businesses
Irrespective of the Warnaco acquisition, expected earnings growth
appears to be robust. Year 2012 showed an EPS of $5.38, and
analysts estimate 2013 to be $6.39 and 2014 at $7.45. Putting a
20.5 times price to earnings multiple (the current P/E) on 2014
earnings estimates and the stock appears undervalued by over 22%.
PVH is one of the top three apparel stocks for 2013 (read about
Delphi Automotive PLC
is a vehicle components manufacturer that provides electrical,
safety and thermal technology solutions to the vehicle markets.
It is one of the largest vehicle component manufacturers, and its
customers include some of the largest automotive original
equipment manufacturers. The stock is MSD's
fourth largest holding
15.5% of its total holdings.
Global auto sales is expected to be up in 2013 thanks to
expansion in the U.S. and China; as well, revenue in Asia is
expected to grow faster than other regions, where its backlog has
been growing rapidly. With a new cash dividend of $0.17
quarterly, the stock now has a dividend yield of 1.6%.
Billionaire Dan Loeb calls Delphi one of his cheap stock picks
(see all of them here).
One of Dell's big selloffs was
WEX Inc (
which had previously been Dell's fourth largest holding and was
13.7% of the MSD's portfolio. WEX, formerly Wright Express
Corporation, provides payment and information management
solutions, including its top segment, fleet payment solutions,
which provides customers with fleet vehicle payment processing
services. It appears that WEX is expensive. WEX is currently
trading at a price to earnings ratio of 31 times, which is nearly
a 200% premium to the S&P 500 P/E ratio. On the other hand,
its 5-year average premium to the S&P 500 is only 87%.
Don't Be Fooled
The big news for
of late has been his plans to take his prized company, Dell Inc.,
private. However, I figured it would be worthwhile to take a
break from the Dell buyout saga to see where else Michael Dell
has his fortune invested. DineEquity is a big bet on a rebounding
casual dining market, while Michael Dell's bets on Asbury and
Delphi are broad bets on the auto market. I also like his bet on
PVH, which will be quite a bet on the apparel industry, bringing
together a number of top brands.About GuruFocus: GuruFocus.com
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