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Although Michael Dell is best known for being founder, chairman, and CEO of Dell Technologies ( NYSE: DELL ), the billionaire is also a big investor. His MSD Capital is a private investment firm handling the investments of Dell and his family.
He subsequently formed MSD Partners , which is an investment advisory firm that was created to allow outside investors to put their money into stocks based on MSD Capital's strategy. It invests in credit (MSD Credit), private equity (MSD Private Capital), real estate (MSD Real Estate), and growth stocks (MSD Growth).
While MSD Partners has a diverse portfolio with over $1 billion in assets under management, MSD Capital is much smaller and much more narrowly focused. In fact, Dell has put his $348 million in AUM into just three stocks.
Its notable that two of the three holdings in MSD Capital also make an appearance in the portfolio of MSD Partners, but at significantly smaller amounts. Thus, it might be instructive to see exactly where Dell is putting his own money into play.
Key Points About This Article:
- Michael Dell is best-known for founding Dell Technologies , but he is also a private investor as well as running an investment advisory firm.
- His personal investments are made through MSD Capital and are concentrated in just three stocks.
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Life Time Group Holdings (LTH)
Woman sitting on a treadmill
Luxury fitness stock Life Time Group Holdings (NYSE:LTH) caters to the well-heeled at its upscale athletic country clubs. Arguably unique among fitness clubs and equipment makers, Life Time does not have a marketing budget. It does not promote itself at all, but leaves it to the customer to find out about its services and make an organic push to join.
So, although it does see an increase in memberships around the first of the year just like other gyms and fitness centers -- even the rich, apparently, make New Year's resolutions to get in shape -- it does not experience the same sort of membership loss as other venues. Moreover, it is not concerned at all about members buying a stationary bike or treadmill from Peloton Interactive ( NASDAQ:PTON ) and not coming to its country clubs.
Because it is an experiential setting, Life Time Group is able to attract and maintain members and has recovered all of those members lost due to the pandemic. CEO Bahram Akradi told Bloomberg that most of its clubs operate at or near capacity.
Sales jumped 19% in the second quarter to $668 million resulting in a 47% surge in net income to almost $53 million. The stock is up 66% in 2024. Although it only went public in 2021, for investors looking to tap into the fitness regimen of the wealthy without buying faddish equipment makers like Peloton, Life Time Group Holdings seems to have the inside track on growth.
Dell owns 8.9 million shares valued at $201 million and representing 61% of MSD Capital's portfolio. His MSD Partners owns another 182,000 shares, but it represents less than 0.5% of the portfolio.
Safehold (SAFE)
Real estate investment trust (REIT) Safehold ( NYSE:SAFE ) is the second-biggest stock in Dell's family portfolio, a stock that also crosses the border into MSD Partners' portfolio, too. Dell owns 5.8 million valued at $112 million, which is good enough for 32% of his holdings.
Safehold also targets the upscale market, buying high-end multifamily, office, industrial, hospitality, student housing, life science, and mixed-use properties. It believes they generate higher returns with less risk, no doubt because the rich are the last ones to feel the effects of a recession, inflation, and high interest rates.
Safehold says it created the modern ground lease industry. In a ground lease, as its name implies, a tenant leases the ground a building is built on. But rather than having a structure already in place, the tenant builds and owns the building afterwards, paying rent only for the property. Typically they come with very long leases. For Safehold, they range from 30 years to 99 years .
While the REIT's leases are almost all ground leases, it classifies some of them as sales-type leases, which transfer ownership of the property to the lessee over time. It actually generates most of its interest income from these types of leases and its net investment in sales-type leases totaled $3.4 billion in the second quarter. Its ground lease receivables totaled $1.7 billion.
Shares of Safehold are up 11% in 2024 and are 34% over the last 12 months. Real estate has been the strongest sector for the past quarter as the promise of interest rate cuts grew.
Townsquare Media (TSQ)
People sitting around a table looking at reports
The third stock in Dell's portfolio is Townsquare Media (NYSE:TSQ), a small-cap digital media and advertising outfit. It also owns website design and hosting services through its Townsquare Interactive subsidiary, and a portfolio of more than 400 local news and entertainment websites and mobile apps. Included are almost 350 local radio stations as well as sites such as XXLmag.com and UltimateClassRock.com.
Despite the recovery of digital advertising spending, the dollars haven't really flowed yet to Townsquare Media. Sales year-to-date are down 3.7%, excluding political ads, while adjusted EBITDA fell 9% year-over-year. Digital ads did grow 1.1%, but could not stop the companies overall decline. TSQ stock is down 6% in 2024 and shares have lost 14% of their value over the past three years.
Townsquare does pay a dividend of $0.77 per share which yields 7.8% annually. While that has helped mitigate some of the stock's decline, the distribution probably also weighs on the company's performance.
Dell owns 1.5 million shares of TSQ stock worth $16.7 million, good for a 4.8% share of the portfolio's holdings.
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