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)
[…]we like to honor a lot of other net sites around the web, even though they aren’t linked to us, by linking to them. Underneath are some webpages really worth checking out[…]
I’m a New York City-based financial advisor at Ritholtz Wealth Management LLC. I help people invest and manage portfolios for them. For disclosure information please see here.
Subscribe & Reform
Get a Full Investor Curriculum: Join The Book List
Every month you'll receive 3-4 book suggestions--chosen by hand from more than 1,000 books. You'll also receive an extensive curriculum (books, articles, papers, videos) in PDF form right away.
Title
[…]here are some links to websites that we link to simply because we think they may be really worth visiting[…]
Title
[…]Here is a great Weblog You might Come across Exciting that we Encourage You[…]
Title
[…]The information talked about in the post are several of the most effective accessible […]
شبکه اجتماعی
Many thanks once again for the blog publish.Genuinely thank you! Excellent.
Title
[…]always a huge fan of linking to bloggers that I love but don’t get a great deal of link love from[…]
Title
[…]just beneath, are quite a few totally not connected web sites to ours, on the other hand, they may be surely really worth going over[…]
Title
[…]we like to honor a lot of other net sites around the web, even though they aren’t linked to us, by linking to them. Underneath are some webpages really worth checking out[…]
Title
[…]just beneath, are various absolutely not associated websites to ours, however, they are certainly worth going over[…]
Title
[…]The info talked about in the article are several of the ideal out there […]
Title
[…]Every the moment in a whilst we decide on blogs that we read. Listed below would be the most current internet sites that we choose […]
Title
[…]Here is a great Blog You may Uncover Interesting that we Encourage You[…]
100% kona coffee
100% Kona Coffee Beans fancy roasted by LION have been enjoyed by coffee aficionados for well over 100 years.
Title
[…]just beneath, are many entirely not related sites to ours, nevertheless, they’re surely really worth going over[…]
Title
[…]usually posts some quite fascinating stuff like this. If you are new to this site[…]
military in iraq blog
[…]check below, are some completely unrelated web sites to ours, nonetheless, they are most trustworthy sources that we use[…]