SFE - I posted this earlier in the year on another thread and thought it might be informative here for people not familiar with SFE:
SFE is somewhat like CMGI. They are in the business of developing partnership companies that they eventually take public. Also, like CMGI they follow a "Japanese model" of having partnership companies support each other to the benefit of all. They do not just invest in companies, they work to develop them. They currently have interests in about 35 companies. When they do an IPO they give shareholders of SFE rights to buy stock of the new co. They did a chart in their last annual report that said if someone invested $10,000 on 12/31/92 over the next five years they would have received rights in nine other companies and have an investment worth $226,000 at 12/31/97.
A recent newspaper article said:
"Safeguard invests on several levels. It makes venture-capital investments in private companies, often appointing key managers; it offers investors "rights" to buy shares of the companies as they prepare to go public, magnifying their potential returns beyond Safeguard's own share price; and it continues to hold shares in companies it has helped take public, including CompuCom, Cambridge Technology Partners, Sanchez Computer Associates, and OAO Technology Solutions, once they are publicly traded."
In the past most of the partnership companies have been in technology fields but they have recently focused on Internet companies (They seem to have a history of being able to focus on "hot" market segments).
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One major change since the above was posted is that instead of granting SFE shareholders rights in the new companies, shareholders are now given the chance to participate in IPO's. Two were done recently. In the case of ICGE shareholders of record in SFE were allowed to purchase 10 shares of ICGE at the IPO offering price of $12 for every 100 shares of SFE they owned. In the one month ICGE has been public it has risen to over $80 per share. The other company, USIT has risen from about $10 to $30 in a similar time frame. SFE holders could buy 5 shares of USIT for every 100 shares of SFE.
It would seem that ICGE has had such a strong run because many Internet pundits see business-to-business e-commerce as having much greater potential than business-to-consumer. However, business-to-business e-commerce is at an earlier stage, and there are fewer public companies to choose from.
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