While I respect John's dividend view, I look at private companies as you would a product pipeline. Until they're rolled out and being "sold" you don't know how well they'll do in the market. While product diversification is generally a good thing, it doesn't assure success. e.g. Conglomerates today are almost always valued below their breakup value.
SFE sunk many of its assets into system integration shops OAOT, CATP, ISCG, DTPI. These were largely done, I think to try to recreate the success of CATP, which may or may not have been a great idea.
Also, just having 25 co's in the pipeline, doesn't mean they'll all come to fruition (some may not even make it public. Others will be significantly delayed. Multigen is a good example of this, now going thru an acquis/merger and trying to get it's act together just to be ready to go public.
SFE has an interesting set of pipeline companies -- that's why we're all in this -- but it's very difficult to accurately model a value on that portfolio (sure asan analyst you could do it, but would you *trust* that model?
Therefore, to me, NAV makes up at least 90-95% of SFE's legitimate market cap. That's why I cannot understand the current situation. I believe PE watchers have bid the stock up. SFE may also be periodically supporting it, or there may be some other unknown factors (e.g. good news unknown to the public) thaat will justify the price in hindsight. Absent that, it's just plain inefficient markets at work. |
