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Top Money Manager Tilson Spies Major Catalyst for Dell

Wednesday, 14 Sep 2011 | 6:31 PM ET

Top money manager Whitney Tilson tells us, he’s excited about a new position in a stock he calls relatively safe and cheap.

”We see a lot of opportunity across big cap blue chips,” he says. “And I’m itching to tell you about this.”

Although Tilson says his biggest position is still in Berkshire Hathaway and he remains bullish on Microsoft – the teacher’s got a new pet.

”We actually trimmed Microsoft in order to buy Dell,” he tells us. “It’s trading at 5 times earnings net cash. A third of its market cap is in cash,” he says.

But the reason Dell quickly rose to the head of the class is that “Dell just announced a new $5 billion share repurchase program yesterday on top of the $2.1 billion that remains of the old one.”

Now here’s the important part:

”That means Dell will retire 27% of their outstanding shares,” he says. “This is a major catalyst and the business is doing great.”

In fact, Tilson is so excited about this company, he's making his proprietary research available to Fast Money fans right here and right now. Click here to go to "An Analysis of Dell" compliments of T2 Partners.---

And if you’re looking for a trade that’s a little more turbo charged – Tilson tells us he's taking a hard look at following Bill Ackman into a bullish play on the Hong Kong dollar.

The Hong Kong Dollar Trade
A look at the Hong Kong dollar and how to play it, with Whitney Tilson, T2 Partner.

But Ackman isn't just buying Hong Kong dollars. ”Bill Ackman put on this trade through call options,” he says, “as a bet that the Hong Kong dollar will be revalued in stages.”

Why play it with call options?

"You get a much bigger bang for your buck," he says. "But you have a time limit on your trade because options expire."

Here's the thesis:

Because the Hong Kong dollar has been pegged for 28 years to the US dollar and that peg hasn’t moved at all for 28 years – volatility is extremely low which makes the options very cheap.

And although Ackman agrees with the broad market that the Hong Kong dollar will be pegged to China’s currency in about 5 years. – he thinks something else will happen in the near-term.

”What he’s betting is that in the next year the Hong Kong dollar will be revalued by about 30%.”

In other words, Ackman’s bet is that the Hong Kong dollar will be revalued in stages. "A one time 30% revaluation during the next year," Tilson says again, "and then Ackman thinks they hold that peg firm until they switch the peg entirely to the yuan."

If Ackman is right, the trade could pay in a big way.

”If that happens during the time frame of the 1 year options he owns he could make as much as 60 times his money,” Tilson says.

* Whitney Tilson is among the most esteemed money managers on Wall Street - he's founder of T2 Partners and he became widely followed for accurately trading the housing crisis, while developments were still in early innings. He's also a CNBC Contributor.



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Trader disclosure: On Sep 14, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Finerman and Finerman’s firm own (AAPL); Finerman owns (BAC) and Finerman’s firm own (BAC) leaps; Finerman owns (JPM) and Finerman’s firm owns (JPM) stock and (JPM) leaps; Finerman’s firm owns (IBM); Finerman owns (GOOG); Finerman’s firm and Finerman own (ORCL); Finerman’s firm and Finerman own (MSFT); Finerman’s firm owns (TGT); Scaramucci owns (GS); Scaramucci owns (GOOG); Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Terranova owns (OXY); Terranova owns (HOS); Terranova owns (WFM); Terranova owns (OIH); Terranova owns (CVI); Terranova owns (AXP); Terranova owns (EMC); Terranova owns (AMZN); Terranova owns (WFC); Terranova owns (AAPL); Terranova owns (IBM)

For Anthony Scaramucci
One of 8 national finance chairs for Mitt Romney campaign
Held a fundraiser for Mitt Romney
Has contributed to the Romney campaign

For Dan Dicker
Dan Dicker has options positions in oil futures

For Whitney Tilson
**No Disclosures

For Joe Terrranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of Building Materials Holdings
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