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Larry, you bring up some good points, but maybe we differ in degree slightly. First, I'm not sure what range of premium SFE will trade at over NAV, but I'm quite sure it won't be the wild stuff we saw this spring. I have the current premium around 25% to 30% depending on if USIT is included. Before 1999, SFE traded at a modest premium and at times none at all even though stocks like SCAI, CVSN, DTPI, and even for one year, the fledgling Internet Capital Group were coming down the road and were known about. It was always a source of some frustration to many SFE investors that the market consistently did not pay much for the private pipeline which we thought should have been worth more. But the reality is that the market did place a low premium on all of SFEs non-public investments, and there could very well be coming a time where SFE trades once again at a premium that you or I may think is unjustifiably low. That is just speculation, and it will take some time and testing in up and down markets to see what pattern develops. I'm not bearish, just trying to get a frame of reference in which to judge future buy/sell decisions and potential risk. If it did trade at a 100% premium under these new conditions, I would trade from the long side very carefully, with an eye on the exit as I would view it as not sustainable. I actually don't think it will happen in any time period as far as I can see currently. As for SCAI, it did not look very impressive to many, when it first came out, and only later took on a high luster. CVSN may go to $50 [many of us would be glad], but it is now $14. Some of the pipeline will be relative duds, as OAOT and DOCC, are so far. Assuming USIT appears shortly, and adds a buck or two, a 50% premium would put SFE in the mid $60s if my estimates of NAV are correct. I'd view risk as somewhat high at that level of premium and would be watching sentiment and technicals carefully if long a trading position. Like I said though, the market will determine the normal range, but keeping in mind the NAV, and SFEs stock price in relation to that, is once again useful IMO. [It was actually useful this spring from the standpoint of assessing ultimate risk, but was would have been counter-productive for trading. Watching technicals and sentiment were pre-eminent as emotion and speculation were running so high. Ultimately and as always, fundamentals make their presence known and correct excess deviation from them. The deviations are where trading opportunities lie. Mike |
