Oh man the Dell (DELL) privatization saga will just - not - end... but if you like drama, then the Dell story over the past two months has been a great one. On the off chance you haven't heard, hedge fund manager and activist investor (and major Dell shareholder) Carl Icahn has pretty much told Dell's Board of Directors to pay a $9.00 per share dividend, or risk being replaced by new board members. Most likely it's a ploy to squeeze a better price out of Michael Dell, who's buying back his namesake company at an offer of $13.65 per share. Some say it's a lowball offer - and it probably is - though no other company has come up with a better offer despite the fact Dell made it clear it would consider higher bids. Carl Icahn is saying shares are worth $22.80 each, and by forcing the company to pay a one-time dividend of $9.00, he suspects that will pump the price up to that $22-ish level. He's putting leverage behind his idea too, in the form of threatening legal action. If he can't force the Board into wording the upcoming proxy vote in a way that all but requires them to pay the dividend if the LBO happens, Dell can look forward to a litigation nightmare. What Icahn doesn't seem to be factoring in, however, is the fact that Dell will need to take on more than $5 billion in new long-term debt to pay the dividend. Oh, Icahn actually offered to make the loan, but if liabilities increase, shareholder equity decreases, and all of a sudden DELL is worth just $13 per share again. I'm not sure how he's figuring more debt = more value. I've seen some pretty contrived things in my too-long tenure in the market, but I've never seen a company add debt just to pay a special dividend. It really forces you (well, forces me anyway) to wonder what his agenda is. If he really thinks the company can turn things around, he's certainly not putting it on that path. More realistically, he's simply trying to get a higher bid for the go-private offer. He's just doing it guns ablazin'. Bryan Murphy has some pretty interesting perspective on the whole thing. You can check out his take on Icahn's maneuver right here. We've got bigger fish to fry. The Rally's Already Gotten Sleepy? One of the best pieces of writing advice I ever got was to use as many words as necessary to tell my story well, but not one word more. I don't need many words to tell you what's going on with stocks today or what it means for tomorrow, so I'm going to be even briefer than usual with this look. The good news is, stocks managed to make another small gain today. That's the fifth in a row. The bad news is, these bullish efforts are getting progressively weaker, and are happening on lower and lower volume. It's almost an apologetic kind of buying, with undertones of uncertainty. Not good. Yet, the doubtful nature of the rally doesn't change the fact that stocks are still rising because the bulls are buying 'em. That's more than the bears can say for themselves right now. More than anything else, I think most traders know the market's overbought and ripe for a dip, but they don't want to miss out on the off-chance this rally does continue. Throw in the fact that most traders also sidelined themselves today because they don't want to be caught on the wrong side of tomorrow's unemployment data, and this lethargy actually makes a lot of sense. It's certainly not a sexy or actionable analysis, but it is what it is. If the market isn't going to tip its hand yet, there's no sense in pretending like it is. Friday's employment numbers should stir that pot and reignite the trading fires. So, check back then. In the meantime, maybe you noticed yesterday's pick of Cadence Pharmaceuticals (CADX) was up a nice 4% today. Not a bad start at all. Gotta be honest though.... like I said yesterday, it's tough for us to squeeze in a lot of new picks or offer much follow-up on those Featured Stocks. We just have so much other stuff to get to in the newsletter, like today's look at small cap, sector-based fundamentals. If you really want to get stock picks (entries as well as exits) on an ongoing basis, you need to become a subscriber of the SmallCap Network Elite Opportunity. I know for a fact that the SCN EO added a brand new pick today that looks like a big fat juicy steak just waiting to be eaten. I don't know how they dug it up, but now that I've heard their thesis, I'm glad they did. It's not too late too get into that pick either. Click Here to Learn More and Sign-Up. Or, copy and paste the following link in your browser: http://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=SCN+Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1/ Top (& Bottom) Small Cap Sectors for 2013 Last week we painted a big picture of the market's fundamental landscape, pointing out where the big growth was likely to come from in 2013, but where the value was as well. We pretty much concluded that the financial sector's stocks were going to be the unsung heroes for this year and next, though the technology and consumer discretionary segments were also better positioned than average. That analysis was focused on the large cap segment of the market though... the S&P 500's stocks. It's important data to be sure, but if you're reading this, then you're at least moderately interested in small cap stocks. So, to round out the analysis in a way that really gives you some firepower, today we're presenting the second half of the look - a fundamental overview and outlook for the S&P 600's small cap names. You might be surprised to learn what's good for the large cap goose isn't exactly good for the small cap gander. First and foremost, prepare yourself for what looks like shockingly high valuations. These P/E ratios are exaggerated because they have to factor in more than a few unprofitable companies (which can really sap aggregate value). Don't sweat it. Remember, this exercise is one of relativity... where things are going compared to the past, and how these groups stack up against their peers. Beginning with earnings growth, note that technology and consumer discretionary stocks are looking at huge growth prospects in 2013, with earnings projected to increase 87% and 37%, respectively. To be fair, small cap technology stocks are largely poised for big growth this year because last year was pretty rough, but still, there's a lot of potential here. You may have noticed that the income projections for small cap energy stocks are higher by 150% for 2013, but that's a misleading figure. Like technology, the energy sector saw a miserable 2012, so any improvement at all this year is going to look huge. The small cap energy sliver of the market is still hitting a headwind though. The same goes for small cap materials stocks. Though not quite as impressive as technology and consumer discretionary stocks, small cap financials are legitimately positioned to crank up their bottom lines by 24% this year, versus last year's 43% increase. From a valuation perspective (and again, don't get rattled by the seemingly large numbers), consumer discretionary stocks and financial stocks are the cheapest ways to go when looking for growth from the small cap segment of the market. For 2013, both are projected to be as low-priced as they've been in years, and for the financials, the value-turnaround since 2009 has been huge and is still going strong. There's another quiet hero that sticks out on the P/E ratio grid, however, that didn't necessarily look all that impressive on the growth grid.... small cap industrials. These stocks are habitual bargains, and though they rarely lead the growth race, they're almost always reliable performers. The valuation grid also explains why the energy sector's big growth forecast this year isn't all that impressive - it's still the most expensive sector within the small cap world. Though we probably won't come back to this bird's-eye view analysis for a while, we probably will be revisiting different pieces of it on a sector-by-sector basis when something big changes, or when we've got a few stocks to specifically talk about that fit within the framework of our outlook. In the meantime though, you should be using this data to make priority lists for your portfolio's focal points this year. Picking the right sector is about 40% of the battle. Talk to you on Friday, when we'll be slicing and dicing February's employment numbers as well as this week's other big economic data.