For AJO LP, Dell Inc. “has been the single best investment we ever made,” according to Theodore R. Aronson, managing principal of the Philadelphia quantitative money management firm.
From “small-, mid-, large- to megacap, it just kept going,” Mr. Aronson said of Dell's growth.
AJO's Dell stock beat its benchmark “wildly so. We caught the wave.”
In more than 700 transactions with Dell stock since the mid-1990s, AJO performance included such big gains as 283% for one client and 820% for another, according to AJO data.
But Dell's heyday faded and “we haven't owned it since 1999,” Mr. Aronson said in an interview.
“Dell was a textbook example of quants like us getting lucky: stock was selling at discount multiples, e.g,, low (price-earnings ratio), PCs (personal computers) were all the rage — thus growth was often above expectations — earnings kept beating analysts' estimates.” Mr. Aronson said. “The "luck' was correctly anticipating when the tide turned.”
Dell has fallen from its pinnacle as a once-star performer in portfolios. Michael S. Dell, chairman and CEO, is teaming with Silver Lake Partners LP to buy back the company. A shareholder vote on the proposal is scheduled for Sept. 12.
For the year ended June 30, Dell's total return was 9.5%, underperforming the S&P "s 20.8% in the same period.
