Quick Hits: GAO Goes Bearish on U.S., Quant Shake, and VMware

Catching up and emptying my ever-overflowing link box:

  • New GAO report awfully bearish about U.S.’s fiscal condition (GAO)
  • Quant funds start selling the recent earthquake as an “opportunity” (Marketwatch)
  • VMware priced at high end of the range, and fair value is generally viewed as closer to $35 (Reuters)


  1. VMW trading at 50.34 as of 11:45am EST, which means that its market cap is roughly $19 billion. Even if EMC owns “only” 85% of that now (after already taking in $1.2b between the IPO and private placements to Cisco and Intel), their stake is still worth $16b. Add in the $1.2b from the IPO/private placements, and they turned $625m into $17.2b in less than four years. That’s an annualized IRR of roughly 150%. Not bad!

  2. Sorry for commenting on a cold post, but just had to weigh in again – after blowing out earnings, VMW now trading at 114, with a market cap of $44 billion. Jesus h christ!
    interesting, EMC is now trading at 24, with 2.1b shares outstanding. if they still own the 326.5m shares of VMW that they did as of the ipo (cf the last amended s1) then each share of EMC owns roughly .155 shares of VMW. multiply that by VMW’s current share price of 114: each share of EMC owns $17.72 worth of VMW. thus, the market values the rest of EMC’s business at just $6.50 a share!
    a trade for the adventurous out there – long EMC, short VMW as long as EMC maintains its stake in VMW. the market, for whatever reason, isn’t properly valuing emc’s stake in vmw. look at the d**m s1a – EMC still has 98% of the voting rights!