DELL: “Do As I Say, Not As I Do” – Pzena Edition

• Posted by kid dynamite
• on February 11th, 2013

I’m going to try to keep the opinions out of this post, and just lay out some facts.

1) In their 13F from the end-of Sep 30th 2012 quarter, Pzena Investment Management held 14,416,298 shares of $DELL

2) In their 13F from the end-of-Dec-30th 2012 quarter, Pzena Investment Management held 12,677,923 shares of DELL

3) during the 4th quarter of 2012, DELL traded with a  range of $8.69 (11/16/2012)  to $10.85 (12/11/2012)

4) during the 4th quarter of 2012, Pzena Investment Management sold 1,738,375 shares of DELL, or 12% of their stake.

5) This decrease in the DELL stake cannot be explained by redemptions, since a comparison of the two 13F filings shows that not all positions were sold in the same ratios.

6) Richard Pzena was quoted in Barrons, regarding the DELL LBO:

“”I don’t think a leveraged buyout would get much support at $15 share,” says Richard Pzena, CEO of Pzena Investment Management, an asset manager that held 14 million Dell shares at the end of the third quarter. Pzena says his firm’s valuation work suggests Dell is worth $25 share. “We might think about supporting an LBO at $20, but at $15, we think an LBO would amount to insiders trying to steal the company because of current market conditions.”

7) Pzena was quoted in NYT Dealbook, regarding the DELL LBO:

“There’s no logic for this deal other than greed,” Richard Pzena, the firm’s chief investment officer, said. “If Michael Dell wants a bigger ownership stake, let Dell make a tender offer for the stock. Why does he have to force out everyone else?”

Now, dear readers, I ask you this: why should we take seriously the objections of a guy who was selling stock THIRTY percent lower than the current bid on the table?

-KD

h/t @mojoris1977 and @Volslinger

disclosure: short DELL Feb 15th $13 puts

also: for those who will try to rationalize Pzena’s DELL trades: it wasn’t a top holding in his fund, so “trimming the biggest position risks” doesn’t work as an explanation.

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