Techinsidr Exclusive: Whitney Tilson’s Next Big Bet In Tech

As prominent value investor, Whitney Tilson has developed a knack for putting his neck out on the line and making bold bets.

Tilson’s hedge fund, T2 Partners, is well recognized in the investment community for making contrarian bets against high-flying tech companies and momentum stocks.  One of his more high-profile short positions was a bet against Salesforce.com ($CRM) which I discussed on my blog in a series of articles (1, 2).

Tilson’s strategies haven’t exactly delivered the best results for his investors so far.  In an August letter to investors, T2 Partners reported a -13.7% decline during the month compared to -5.4% for the S&P 500.

Although those numbers are downright ugly, I have reason to believe that Tilson could be back on the comeback trail, especially with his recent portfolio changes.  Tilson reduced his Microsoft ($MSFT) position and is starting to seek out other long opportunities.  I definitely see a positive shift in his investment philosophy as well.  Tilson is using his strengths as a value investor by hunting after “cheap” tech stocks, rather than taking risky short positions on high-flying companies like Netflix and Salesforce.com.

One stock Tilson is bullish on is $DELL, which now represents his 5th largest position in the T2 Partners portfolio.  From an investment thesis perspective, I think Tilson is right on the money with this pick.

Whitney Tilson recently forwarded me some slides he put together on $DELL.  (see below).

Tilson makes a very strong case that Dell is downright cheap and I think he could be right.

Do I think Dell is a revolutionary company that is going to change the world? No.  Not at all.

However, I do think they are definitely a leader in the enterprise sector and HP’s recent missteps provides Dell a great opportunity to steal market share.  Dell has done a great job shifting their focus from the low-margin consumer sector to the high-margin enterprise business.

Growing the business in emerging markets is another critical area where Dell continues to show improvement.  The company also recently announced an aggressive repurchasing program and insider buying is on the rise.

Given all of these factors, I think Dell represents a unique opportunity for value investors.  If the company continues to execute and make strides, I think Tilson could be right about his Dell thesis.

Special thanks to Whitney Tilson and T2 Partners for allowing me to share these slides.


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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