VMW), which is 80%-owned by EMC, has lost 11% of its value since the start of the year. While EMC is still the clear-cut leader in the storage business, where it competes with NetApp ( NTAP), EMC has shown no immunity to weak IT enterprise spending. That the stock has bounced back by roughly 21% over the past four months suggests investors have become a bit more optimistic about a recovery in IT spending and the direction of EMC's storage business, which has been under significant pressure. I'm not going to boast about how well the storage market is performing. Truth be told, I don't believe the industry is as vibrant as it was, say, two years ago at the height of "everything Big Data." Even so, I believe the fear investors carry about what is projected to be a turbulent rest of the year is overblown. Although EMC posted in-line results, revenue grew 6% year over year -- ample evidence the worst is over. In my opinion, this makes the stock a strong buy at current levels. EMC management has never gotten its due for being able to quickly adapt to changing trends. A perfect example was when management announced plans to spin off areas of its business to create a separate entity called Pivotal. The company believed that although it had assets that were performing strongly, they were getting lost in the shuffle.
Admittedly, given what has been a brutal storage market for most of the year, I had doubts about the risks management has taken, which I felt were going to disrupt EMC's core business. In that regard I couldn't have been more wrong. Also impressive has been VMware's better-than-expected recovery. I noted earlier the stock is down 11% on the year, but there was a point when shares had plummeted 31%. This brings up an interesting point. Unlike many holding companies, I believe EMC has seen more than its share of bearish activity solely due to the uncertainty surrounding VMware. There's no denying EMC has a strong and well-diversified operation. But with VMware's virtualization business threatened by Citrix ( CTXS) and an underrated Microsoft ( MSFT), EMC, by virtue of its 80% stake in VMware, suffered the consequences. Follow @saintssense This article was written by an independent contributor, separate from TheStreet's regular news coverage.