On May 23rd 2012, I was feeling pretty giddy about a purchase I had made in shares of Dell, tweeting:
"Caught a falling knife by the name of $DELL today. In a few yrs, expecting cuts healed and new knife to be used to open bags of money"
Such overconfidence is strongly discouraged, and will often get you killed. But in this case, the purchase worked out. As Dell continued to fall, investors could have picked up this extremely cheap, well-run company that is managed/owned by its founder for an ex-cash P/E of barely over 5. I hope you did! The company has since received a buyout offer from a group including Michael Dell to take the company private.
While the returns arrived a little bit sooner than I had anticipated in that tweet, they were not as large as I expected. I think Michael Dell is getting a great deal on his company. Unlike other investors, I don't blame him for trying to "steal" this company; he's doing exactly what he should be doing. I blame Mr. Market (i.e. all of you!) for assigning such a poor valuation to this company, such that a takeover at this price (P/E of about 9) is possible.
While some shareholders are holding out and hoping for a better deal, that's not my game, so I have sold my shares.
The problem is, in this market, it is getting harder to find value! Any suggestions?
Disclosure: No position