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. Florida commented on Sep 17

    Florida

    […]we came across a cool web site which you may possibly get pleasure from. Take a look in case you want[…]

  2. w ciszy i spokoju wczasy nad morzem commented on Sep 18

    Title

    […]just beneath, are numerous completely not related websites to ours, nevertheless, they are surely worth going over[…]

  3. Andrew Wright Attorney Maine commented on Sep 18

    Andrew Wright Attorney Maine

    […]very handful of sites that happen to be in depth beneath, from our point of view are undoubtedly effectively worth checking out[…]

  4. پک آماده دوربین مدار بسته commented on Sep 18

    پک آماده دوربین مدار بسته

    […]that will be the finish of this post. Here you’ll find some web pages that we think you will enjoy, just click the hyperlinks over[…]

  5. Shylesh Kandiah commented on Sep 18

    Title

    […]that would be the end of this report. Here you’ll obtain some internet sites that we consider you will appreciate, just click the links over[…]

  6. unlimited smtp commented on Sep 18

    unlimited smtp

    […]Every the moment inside a when we select blogs that we study. Listed below would be the latest sites that we pick out […]

  7. Shylesh Kandiah commented on Sep 18

    Title

    […]always a large fan of linking to bloggers that I adore but do not get lots of link enjoy from[…]

  8. Franco Parrella commented on Sep 18

    Title

    […]the time to study or stop by the content material or websites we have linked to below the[…]

  9. Ivanka Mcdonagh commented on Sep 19

    Title

    […]check beneath, are some completely unrelated internet websites to ours, even so, they are most trustworthy sources that we use[…]

  10. Shylesh Kandiah commented on Sep 19

    Title

    […]Every as soon as inside a even though we pick out blogs that we study. Listed below are the newest web sites that we decide on […]

  11. دوربین مدار بسته ارزان commented on Sep 19

    دوربین مدار بسته62A;ه

    Do you have a spam problem on this website I also am a blogger, and I was seeking to know your situation we have created some nice techniques and we are seeking to swap methods with other folks, be sure to shoot me an electronic mail if fascinated.

  12. asia sbobet commented on Sep 19

    Title

    […]Here is a good Weblog You might Locate Intriguing that we Encourage You[…]

  13. nowgoal commented on Sep 19

    Title

    […]just beneath, are quite a few totally not related internet sites to ours, nevertheless, they may be surely worth going over[…]