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How much will Vertical Net be worth to SFE. Assuming my figures are correct, [please correct me if they are not], SFE owns 13%. The offering is for $30M. If it trades in the after-market at 5 X that, or $150 M., then it is worth $19.5M to SFE or $.60 per sh. [precious little for all the hype]. If ICG came public today, and it traded in the after-market at a market cap. of $1.5 Billion [not unreasonable in todays market], and SFE owns 26%, then their interest would be worth $390M., or $11.80 per share. If the current NAV is around $25, then even adding their internet exposure, and using this assumption, only brings the fair value up to $37. If one is buying SFE based on it being a "great value", and if one is backing it up with numbers, one must be assuming that ICG would bring more like a $2.5 market cap. or $19.70 to SFE.[a bit of a stretch IMO], and even that would leave SFE around fully valued. [I am ignoring their other private co's as they have not traditionally added much premium until they are almost rights, and it is doubtful that has changed.]. Luckily, the vast majority of new buyers are not working any numbers regarding valuation. If anyone is unfamiliar with the meaning of resistance, SFE defined it Thu. and Fri. smashing into the triple top. A lot of volume on Thu., and the best SFE could do was add 1/4 point., closing near the lows of the day. The short term peak, was either hit Thu. or will probably be hit in the next few days. Am still very long, and aware of overvaluation, but will be keeping my eye on the behavior [through volume and price] of these new buyers for an exit point very soon for the trading position. I simply do not believe the new buyer is that well informed, but respect their buying power which has been formidable. [there is a small army of new buyers, and most are recruiting friends, so word and potential $ in are spreading fast, conversely, the pool of sellers from the "old days" is drying up as most who wanted to sell have already done so]. Post Vertical Net., as stated previously, I expect their behavior to change for the short term and SFE to decline. As a backdrop, Feb. still does not appear to be a benign month overall for the market, and that won't help. Long term the hype will begin anew, and I expect an ever bigger premium to be assigned to ICG as that IPO approaches. Probably a premium all out of proportion to its immediate benefit to SFE's NAV once it starts trading. Long term still bullish, and maintaining core position. Investors Business Daily had SFE as one of the 30 charts of NYSE stocks they highlight as being especially interesting. Thanks to all for recent posts, it was quiet for awhile. Mike |
