Michael Dell, $100M and Red Hat

Looks like Michael Dell has pumped $100 Million into Red Hat. The investment was made by MSD Capital LP in the form of $99.5 million worth of debentures that were converted into 3.89 million shares of RHAT. Those shares are valued at roughly $43 million (it's not necessarily an immediate loss as the debentures could have been purchased using a strategy called “convertible arbitrage”). This could be taken a couple of different ways really. I don't think there is an acquisition in the works here as him investing personal money in a company and then having Dell Inc. acquire it would surly draw SEC attention (at a minimum). That SEC attention makes me wonder if Dell Inc. has any plans to change their Linux strategy or relationship with Red Hat. It may just be Michael Dell making an investment, hedging his other investments, etc. It may even just have been something he did in response to a recommendation from his investment company. Either way, I think it shows some confidence – not only in RHAT, but in the viability of the Linux market. That is a good thing. We'll have to watch this one closely.

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