So the only question remaining is, when will VMWare be worth more than EMC? 🙂ĬEO & Co-Founder | Angel InvestorĪcorns, Shift, Dropbox, Greylock Partners, Wealthfront, LinkedIn, eBay, Apple. Of course, this is because it’s clear that EMC was pricing in the IPO in the run-up from 12 to 19 ($14B worth) from the Feb IPO announcement.

Overall, the position has returned 80+%, which is great, but doesn’t quite capture the 300% return of VMW post-IPO. I closed out the put spread last week, and now just have the calls which are deep in the money. Since I couldn’t get VMW IPO shares, I used a put spread (Jan 2009) on EMC, 17.5 and 25, to capture value as EMC appreciated, and to generate the cash to buy EMC 17.5 calls at a 10:1 ratio of my desired VMW position. Personally, my trade in this area has been a winner, but still disappointing. VMW valuation is being driven largely by large consumer interest, and that interest just isn’t doing the math on EMC which is broadly held by professional investors and indexes.As a result, the EMC valuation is discounting the VMW stake to a more realistic value. Shares of stock purchased on your behalf. The actual purchase price will depend on the actual closing price of Assurant stock on the offering date and the purchase date. There are liquidity issues with VMW, which are pushing up the valuation artificially. Closing Price at Purchase Date 105 Your Purchase Price 90 100 X 90) The stock prices and the purchase price used in this example are for illustration purposes only.My guess is you are seeing two factors at play here: That just doesn’t make any sense, on its surface. So that means, you are basically buying all of EMC right now for $7.4 Billion, which gets you a $12B+ revenue business with a net margin of 10.8%. They also hold a 87% stake in VMWare, which at today’s close, is worth $33.85 Billion. P/E of 26 on 2008 earnings projection, which is more than double their 5-year expected growth rate of 12%. Even after that price drop, you still have an increase of 17.64 (1.20 spread at purchase divided by 6. On the surface, that looks like a generous valuation for EMC. If instead the stock price falls to 8 on the purchase date, your purchase price is 6.80.

EMC closed at $21.81, and with 2.1 Billion shares outstanding, their market capitalization is now $45.75 Billion. Since they have 383 Million shares outstanding, that’s a market cap of $38.91 Billion. VMWare, after its IPO at $29 per share, crossed over $100 today to close at $101.61. 7, when the news reports of the pending transaction first surfaced. I’ve been resisting any comment on this topic, but I just had to note something. The deals 33.15 per-share cost represents a 28 premium above EMCs closing price on Oct.

Emc stock purchase plan price