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Billionaire Michael Dell's Top 5: DineEquity (DIN), PVH Corp (PVH) And More

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Michael Dell , 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. Michael Dell 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 Michael Dell 's top picks for last quarter. [/size]

MSD Capital's Top Picks

DineEquity Inc ( DIN ) top stock holding
32% of the fund

Asbury Automotive Group, Inc.( ABG ) is MSD's secondlargestholding 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.

PVH Corp.( PVH ) is MSD's 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 last year.

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 all three).

Delphi Automotive PLC( DLPH ) 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 making up 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 ( WXS ), 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%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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