RUN-EMC


While we’re all bitching and moaning about do-nothing old tech stocks like Microsoft and Cisco, EMC has very quietly been running like an escaped convict trying to stop his baby mama’s wedding before its too late.  Run, Jimmy – I just know she still loves you!

What was I talking about?  Oh yeah, so EMC has been an absolute wildebeest over the last year returning a jaw-dropping 52%, almost a double over the tech-heavy Nasdaq (as seen below):

Why, while its old tech brethren are sleeping so soundly, has EMC been such a great performer?  They have something the others don’t – secular growth.

EMC plays in the data storage sandbox almost exclusively and the need to be able to store (and access) data in a scalable way has never been greater.  It also shows no sign of slowing down ever.  We’re not exactly on a trajectory of creating less digital stuff now, are we?

I’m not in the name personally, as far as storage names my only pure-play at the moment is Network Appliance, but the story there is pretty much the same.  When I looked at the numbers between the two companies, however, I was amazed to find out that EMC is outspending its smaller rival NTAP in R&D in a meaningful way, $2 billion annually versus $600 million.

Equally amazing is that EMC has been smart enough to hang onto their single best asset, an 80% stake in virtualization monster VMWare (VMW).  They bought VMW in 2003 for about $600 million and they have since seen a 65x return on it.  Ridiculous!  I’m sure over the years there have been some tempting opportunities to have divested of it but the company hung in there knowing that the best was yet to come.

I think the message is that storage, unlike desktop software (as in the case of Microsoft) or physical routers and switches (as in the case of Cisco) is still a growth business.  EMC has done a lot right, don’t get me wrong, but what really separates them from their fellow 90’s era stalwarts is the business they are in.  In the tech sector, end demand makes the stock, not the other way around.  This is something the value guys need to keep in mind when hunting for bargains in the large cap Nasdaq names.

(yes, I know this graphic is gangsta and if anyone from EMC corporate wants to make t-shirts, all I ask is for a size XL mailed my way)

Tags: , , ,

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. خرید vpn پرسرعت commented on Sep 22

    vpn ایفون

    Many thanks again for the site submit.Genuinely thank you! Fantastic.

  2. سرویس vpn commented on Sep 23

    vpn ایفون

    right here are some backlinks to internet pages that we website link to because we feel they’re genuinely value visiting

  3. rolex replika commented on Sep 18

    … [Trackback]

    […] Read More on to that Topic: thereformedbroker.com/2011/05/31/run-emc/ […]

  4. w88 commented on Sep 20

    … [Trackback]

    […] Here you will find 12794 more Info to that Topic: thereformedbroker.com/2011/05/31/run-emc/ […]

  5. eatverts.com commented on Sep 21

    … [Trackback]

    […] Read More on that Topic: thereformedbroker.com/2011/05/31/run-emc/ […]

  6. padelracket commented on Oct 05

    … [Trackback]

    […] Info to that Topic: thereformedbroker.com/2011/05/31/run-emc/ […]

  7. Online smoke shop commented on Oct 30

    … [Trackback]

    […] Find More here on that Topic: thereformedbroker.com/2011/05/31/run-emc/ […]

  8. CI/CD Services commented on Dec 20

    … [Trackback]

    […] Find More to that Topic: thereformedbroker.com/2011/05/31/run-emc/ […]

  9. cornhole game commented on Dec 30

    … [Trackback]

    […] Information on that Topic: thereformedbroker.com/2011/05/31/run-emc/ […]

  10. buy medate online commented on Jan 13

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2011/05/31/run-emc/ […]

  11. this commented on Jan 21

    … [Trackback]

    […] Read More on that Topic: thereformedbroker.com/2011/05/31/run-emc/ […]

  12. DevOps consultant commented on Feb 05

    … [Trackback]

    […] Here you can find 73545 additional Info on that Topic: thereformedbroker.com/2011/05/31/run-emc/ […]