Not So Fast, Dell

Just when it looked like Dell (DELL) was going to leave Mr. Market's arena at $13.65 a share, one of the most respected value investors in the land has said, "Not so fast." Southeastern Asset Management, owner of 8.5% of Dell's outstanding stock, has come out publicly and vehemently opposed any deal at or near the current takeout price. In a letter to Dell's board of directors, a copy of which was filed with the Securities and Exchange Commission, Southeastern did not mince words:  "We are writing to express our extreme disappointment regarding the go-private transaction, which we believe grossly undervalues the Company."

I think Southeastern makes a solid argument with respect to Dell's valuation: If you account for Dell's pristine balance sheet, free-cash-flow generation and future growth in its enterprise software division, it's no wonder everyone lined up so quickly to make this deal happen. When I first took a closer look at Dell and made my attempt at valuing the business, I got to a value of $17 to $20 a share. Southeastern believes that $24 a share is a more appropriate fair value....374 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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