Attractive Risk/Reward for EMC Corporation (NYSE:EMC) Stock

June 10, 2016

Sean Gavin, Portfolio Manager at Fidelity Management & Research Company, says EMC Corporation (NYSE:EMC) has become one of his larger holdings because its merger opportunity and attractive risk/reward.

EMC is being purchased by Dell, which is a private company. It’s become a large holding at our fund because of a merger opportunity that we see in it. We are going to get a large payment of cash along with a stock tracking the performance of VMware. Through this, you are able to buy VMware at a very steep discount as well as getting a nice return on the cash in the meantime, and that’s I think a very interesting risk/reward in the marketplace today.

…Storage is a constantly changing marketplace. I think its becoming a private company is actually going to be a good place for EMC to be particularly matched with Dell over the long term. We are now seeing enterprise storage moving from hard-disk drives to flash, and that’s going to be a big transition. But those transitions I think are lot easier to handle as a private company as opposed to a public company. So I think the future for Dell Technologies overall is quite healthy, particularly in terms of all the transitions they have to handle in the future.

Sean Gavin