Net net, SFE is overweight in a few issues, but they can be balanced out over time.
BTW Rick, you're off base on this one re selling restrictions. SFE can sell as much as it wants at any time, but just has to file.
Of course SFE does put pressure on stock price if they sell, but as some others have pointed out, if SFE had never sold a share of any company they brought public over the past 15 years, their NAV would be higher than it is now -- so they clearly sell too soon on some occasions.
My experience is the company rarely seems to absolutely exit a stock except 5 years or more after the IPO. They seem to continue to hold and if needed support the stock price just like an underwriter would. That may not serve their need for exit, but clearly also does not generate taxable gains, so it's got pluses and minuses.
While I'd like to have seen SFE exit from CATP, I also have learned to respect their judgement on future potential. They are overweight on CATP, and it appears the only way out of that is to grow the number and size of other holdings to reduce the CATP factor.
Yes, SFE is vulnerable if CATP gets slammed, but as you and I have discussed, while it appears CATP has some serious challenges, they have not stumbled yet -- I know you think that day is not far away, but there is no evidence yet that it is imminent other than the general tech malaise.
OTOH, Anderson consulting could turn around tomorrow and try to buy CATP, and you could be looking at a healthy premium. Or another bib 4 consulting organization might want them despite the high price tag as a way of getting around the current people shortage in the industry.
While it's true, as you've pointed out, that CATP's people can leave at any time, they are also a significant asset right now, since good people are hard to find. And while growth may slow, they still have lots of business available. Something that's not been discussed e.g. is the impact of the India sanctions on Y2K work. Will that mean U.S. co's have to repatriate some or all of that work now? Will that be a windfall for companies like CATP? |
