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What is VERT really worth? From a slightly different angle, the market is saying it is worth approx. 130M. oz of silver, or 1 Billion lbs. of copper, or 25 M. oz of gold, or 238 million bushels of wheat, or 60 million barrels of oil. [I was going to do this comparison with the mkt. cap of MSFT, but the calculator started smoking!] Of course this is more extreme than comparing apples to oranges, but may shed some insight into just where the market is valuing certain financial assets. Compare the above commodities to VERT with a few $M in sales and substantial losses, but with what appears to be a bright future. Is it worth it? One could say yes, by definition, because the market is voting with it's pocketbook. That is true currently, but potentially dangerous in the long run, as in 1989 the market was saying that the value of real estate in Tokyo was worth as much as all the real estate in the U.S. That is no longer the case as real estate in Japan has had a major adjustment downward for now 10 years. This mania for financial assets seems a bit out of touch with the real world and other valuations. Even if one totally rejects the view that there may be a major disconnect between the valuation of -especially some internet stocks and their comparison to tangible assets, and one compares VERT to other financial assets, the valuation seems ahh...ample. According to Bob Miller, VERT has a market cap of $714M. The market is saying that VERT is worth almost exactly 50% of the value of Safeguard Scientifics [$1.42B] with all their public and private holdings [including VERT and ICG itself!]. Don't get me wrong, I enjoy the party as much as anyone, [and am most grateful to be making a living here rather than raising cattle or wheat] but at some point the dangers of current pricing models will become uncomfortably apparent. Have a great week, Mike |
