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  • Writer's pictureAdarsh Shyamsundar

An Investing Checklist and It's application

This blog is intended to showcase a potential checklist for investing. I am a firm believer in the requirement of a sound process and values as it relates to any field of work, the same is critical to investing too. The outcomes may not always pan out they way we expect, due to several reasons. But, if you have an outlined process one can go back to introspect it and improve the process. The write up is also a reminder that you do not have to get a FOMO (Fear of Missing Out) and run behind shiny objects to do well in investing. It talks about my purchase into Dell, a big “old tech” company.

(Before you read the blog, please read the disclosures section at the end. This is not financial advice, and we are not recommending a stock or any investment. What prompted this blog is knowledge sharing, investing is best explained by real-life examples.)

Back to the process and investing, here I use the example of Dell. Why choose Dell? One, it’s a recent purchase, fresh in my mind 😊 and since it is tech/AI related it may make a more interesting read. But also, to highlight that you don’t need to take high risk for rewards and it is about looking at the downside protection. When people think Dell is “old tech” and rush for the latest hot stocks, such situations can provide opportunities.

I show the checklist below and should be no surprise to any followers of Buffett. The details of its application are in the blog.

  1. Is the company in my circle of competence?

  2. Who is running the show? – Management and shareholder orientation

  3. Is it selling at a reasonable value vs expected returns? (As defined by your valuation parameters.)

  4. Future Prospects: Is the company doing something that will be needed for the next 3-5 years or more? Who are the other players in the industry? What are the tail winds and head winds?

  5. Do you trust your research and are willing to take the bucket /washtub (and not teaspoons) to scoop up the shares? (Of course, the size of the bucket is subjective, thousands of dollars for some vs. millions for others)

Let’s walk through step by step on how a buy decision was made. No check list is foolproof, and every company is unique, so additional due diligence must be done, not all of which is mentioned here. As you will notice, the checklist is cloned largely from the teachings of Warren Buffett and Charlie Munger. This is an application of those teachings and hope I have done some justice.

Circle of competence:

This first step is probably the most critical, understanding the business and the industry is key. Having spent 20 years in the tech industry, I am familiar with the hardware and software services that Dell provides.

Review the quarterly 10Q & earnings slides, 10K and DEF14A and ask yourself the below questions and if you feel confident on answering these about Dell.

  • Do you understand the business and how they make money?

  • Do you understand the risks and downsides?

  • Do you understand the competition and relative landscape of the industry?

Management & shareholder orientation:

  • Michael Dell is one of the longest serving founder CEOs in the tech world and has been at helm for 40 years, like Buffett says - he likes CEOs who never want to retire. Dell holds ~53% ownership, music to our ears.

  • If you have followed Michael over the years, he has the same feverish competition as during the early 1980s. Even though he does not have the pomp and show of many other tech CEOs, Michael's actions have moved Dell through the many changes in the tech landscape from PCs, to Cloud, to Data to now AI. He typically is conservative in his guidance and delivers better than what he gives away.

  • Dell has had its share of challenges in the 4 decades – EMC acquisition, VMWare acquisition and spinoff, privatization etc. But Michael has spent much time in turning things around and becoming a real shareholder friendly company, while not sacrificing business opportunities.

Shareholder Orientation:

  • Dell is committed to 80% return of adjusted Free Cash Flow via share repurchases and dividends. Just holding the stock, I am expected to get 10% returns via dividend increases YOY through 2028. On Feb 29th, 2024, Dell announced that it has increased its annual cash dividend by 20% to $1.78 per common share, with $0.445 per common share for the first quarterly distribution payable on May 3 to shareholders of record as of April 23. Dell has returned $3.4B via cumulative cash buybacks through FY2Q'24  – figure 1 & figure 2. I talk more about this in the "value" section of the checklist.

  • The targeted M&A comment in figure 1, could be a challenge - something to monitor and it may change my opinion, but I believe that management will be prudent here.

  • Operational efficiency - cost reduction and increased gross margins – Figure 3

  • (Please note - Dell's Fiscal year (FY) is off from calendar year 2024. So the below is from their Q4 FY2024 presentation, which ended in Feb 2024.)

Figure 1: Source: Dell -- Fourth Quarter, FY 2024, Investor Presentation.

Figure 2:  Source: Dell -- Fourth Quarter, FY 2024, Investor Presentation


Figure 3: Source: Dell -- Fourth Quarter, FY 2024, Investor Presentation



There are many ways to skin the cat here, but let’s look at some simple elements.

  • Dividend growth of at least 10% year or year (YOY) through FY 2028. Provides cushion and returns while we wait for share price to appreciate and revenues to grow.

  • 8%+ Diluted EPS growth, would result in ~$9.7 in FY 2028 and even at $120 per share the P/E would be 12.5, cheap given that I have the dividend and share buyback cushion.

  • Adjusted Free Cash Flow (AFCF) was ~5.6B for FY 2024, of which $2.08B was spend on buy backs and dividends. With the new dividend hike that number goes up to ~$3.3B a year. 80% of $5.6B is more like $4.48B which implies that there is and additional ~$1.18B ( i.e. $4.48B-$3.3 B ) in potential returns to shareholders in FY2025. (Note that this calculation conservatively assumes same FY'24 AFCF of $5.6B for FY'25 also )

  • Dell had a FY 23’ revenue of $102B and FY24 revenue was $88B. Even at a price/share of $120 its market cap was only ~$85B and at $106/share the market cap was down at $75B. So, in other words, you could purchase all of dell for between $75B- $88B when its revenue is expected to hit ~$110B-$120B by 2028. With the AI needs and upgrades on all forms of computing, the revenue is expected to grow by at least 3-4%, which I think is a conservative estimate provided by the management.

  •  When I started the research in late 2023, SMCI was hitting $50B in market cap, ~2X the revenue for SMIC projected out to 2024-2025. While Dell was almost the ~0.6X the market cap of its existing revenue. While everyone was running towards shiny SMCI, Dell offered better value with lower risk.

Future Prospects:

Is the company doing something that will be needed for the next 3-5 years or more and who are the other players in the industry? What are the tail winds and head winds?


  • Dell is one of the few companies with the scale and capabilities to build the next generation of AI factories (servers + software). This build out is essential for the AI transition, similar to the cloud build out and transition. We believe that the competition is not in the strong position that Dell finds itself in.

  •   “Our strong AI-optimized server momentum continues, with orders increasing nearly 40% sequentially and backlog nearly doubling, exiting our fiscal year at $2.9 billion. We’ve just started to touch the AI opportunities ahead of us, and we believe Dell is uniquely positioned with our broad portfolio to help customers build Gen AI solutions that meet performance, cost and security requirements.” - Jeff Clarke, vice chairman, chief operating officer, Dell Technologies.

  • Jensen Huang (NVDA CEO) calling out Michael Dell during NVDA’s GTC event in March 2024.

    • “Dell offers more end-to-end computing technologies for the world's enterprises than any company in the world. If you need anything in IT; anything in computing and enterprise, you know exactly who to call. You call Dell.”

  • Dell is not currently in the SNP 500 and given its strong position, it is highly likely that it should be in the SNP 500 sometime in the next 2 -3 years.

Take Action:

Take the bucket/wash tub out – see some of our purchases of Dell, during the first calendar quarter. I wish I had bought more the quarter earlier (Oct-Dec 2023) but, that was still research phase and I wanted to see the earnings in Feb 2024 before deploying more capital.

Figure 4: Source: Polaris Capital Management/Adarsh Shyamsundar, trade executions


Not surprisingly, Dell had some major announcements this month (May 20th) on their server releases using NVIDIA’s latest (HGX B200) Blackwell processors. LINK. These Dell PowerEdge XE9680L servers will be available in the second half of 2024.

Dell has run up a lot in the past few months, more so than I had expected.

I have no idea where Dell will trade next week or next month, but I hope that 3-5 years from now we have earned good total return for our clients.


Data sources:

Dell Investors Website LINK

Dell Earnings Release LINK

Dell Press Release LINK



This blog was written by Adarsh Shyamsundar, Owner & Financial Advisor, Polaris Capital Management (PCM), LLC, a Financial Advisory firm based out of El Dorado Hills, California.

No part of this blog should be treated as financial advice. Please refer to a financial advisor/fiduciary for any actions regarding investing on any equities mentioned in this article. Adarsh Shyamsundar and/or Polaris Capital Management have positions in the securities mentioned in this article.

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