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Dell: The Art Of The Thieves

|About: Dell Inc. (DELL)

On 2/9/2013, I wrote an article titled "Dell: The Art Of The Steal" urging shareholders to vote against Michael Dell and Silver Lake's attempt to buyout Dell (DELL) shareholders at a ridiculously low price of $13.65 per share.

A lot has happened since then. For one thing, the share price has gone up to $14.22 (3/8/2013 closing price) from the $13.63 closing price on the day I wrote the above mentioned article. This article is a follow up on what has happend, and on how my views has changed.

For the most part, there was only painful silence on the buyout issue - literally: Michael Dell won't speak about it, pretending it is not even a material issue during analyst calls.

I want to follow up on the Dell buy-out issue because things have gone from interesting to "very interesting indeed" in a very short period of tiem, which is nicely captured by a WSJ article titled "Icahn Rattles Dell Buyout Proposal" (3/7/2013):

"'We see no reason that the future value of Dell should not accrue to all the existing Dell shareholders,' Mr. Icahn wrote to a Dell special board committee, insisting it agree to his conditions or hold a vote for a replacement board that would...

"Dell said that in the past it has considered a leveraged recapitalization and found it inferior to the proposal to go private."

Two comments on that:

1. You don't mess with Carl Icahn. He will get the board to listen to him and send the stock soaring or he will bail out while the stock is soaring without doing anything. Its a double edged sword.

2. Dell considered a leveraged recapitalization and found it inferior to the proposal to go private... for Mike Dell's bank account.

Another interesting development is that mega private equity firm Blackstone (NYSE:BX), rival computer makers Hewlett-Packard (NYSE:HPQ) and Lenovo Group Ltd. (992), are also expressing interest in the Dell deal.

Previously, my view was that I don't care if the deal doesn't go through, because I am willing to hold the stock and wait for unhappy shareholders to squeeze cash out of Dell. I also was not expecting much of an improvement on the offer price, if any at all. But I held on and all these interesting things happened.

The barbarians are at the gate. Shareholders went home and fetched their pitch forks. The Great Icahn has awaken, and shaken Dell's world. Something's gotta give. The combined opposition forces are now greater than Mike Dell's, something which wasn't true only a month ago. If you were brave enough to hold on to your shares, and if you are brave enough to hold on a little more, something cash may be coming your way. But hold on at your own risk. I'm holding.

Disclosure: I am long DELL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.