May 032006

I think I noted how cheap Dell was in this space earlier. It doesn’t matter, it has just gotten ridiculously cheap, and I’m talking CHEAPPPPPPP.

Southeastern Capital (highly respected) is betting at it clocking in 25-50% a YEAR for the next FIVE years. They did that when it was above 30, and now it’s trading at a significant discount to even that.

Let’s review the facts: BUY IT. For the love of god, BUY IT. I will put in better info later. Maybe. After I get over being depressed at how I can’t buy it cause I’m poortastic.

Some back of the envelope work:

Less 4 dollars a share, the price is 21 dollars for the earnings. So you’re paying 14.4 times earnings for an EXCELLENT company that is expected to grow about 12-15% a year for at least the next few years. It is the lowest cost distributor of computers with a strong brand identity. management is awesome, commited and aligned with shareholders because they’re major shareholders. strong founder/CEO. About $1.40 Free cash flow per share, so you’re paying 15 times free cash flow.

Buffett says he’s willing to pay a good price for a great company (although he usually doesn’t). This seems like the perfect example of such a situation.

Sigh, he said that you encounter abuot a half-dozen opportunities to shoot fish in a barrel after the water’s been drained out and they’ve stopped flopping around and it seems like that sort of opportunity, and I don’t have the means to follow through.

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