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Technology Stocks : TouchStone S/W (TSSW) -- Ignore unavailable to you. Want to Upgrade?

To: jonj1 who wrote (3161)	3/13/2000 12:46:00 PM
From: robbie_nw	Respond to of 3627

jonj..agree that mutual fund is different beast..just not that different. Your still missing the point that NAV already takes into account the higher returns of pre-ipo investments...based on post-ipo pricing. NAV of TSSW's holdings is being calculated by taking the current value of already public companies (ebld) and anticipated stock prices of soon to be traded companies. NAV is not cost basis....rather fair market value. It seems that the argument is that NAV should be 5 times fair market value just because the asset is held within an incubator. The projected price targets being thrown around are not starting with NAV based on cost basis and then multiplying by 5 for the potential increase over cost basis (this would make much more sense)...but rather these projections are starting with a NAV based on post-ipo prices, and then multiplying the value of the holdings by 5. Pray tell...what is it about TSSW that makes its public holdings worth 5x as much they would be available for on the open market? TSSW current pricing seems to be about equal to NAV based on projected (post-ipo) value of their holdings. If the incubator business was all that TSSW had....current pricing would represent fair value. The reason that TSSW is undervalued (imo), is because there is 0 value being assigned to the remaining business. However, TSSW's change of company focus would imply that even they question the viability and growth potential of the "old" business model...and thus lends more understandins as to why the market gives it a value of $0. The market is full of examples of companies that hold large positions in recently IPO'd companies...where the value of the IPO holdings EXCEEDS the entire market cap of the company holding said shares. Case in point...COMS owns 90+% of recent PALM ipo...PALM worth 36 Billion (based on 65ish per share)...thus COMS holding in PALM (90% of 36 billion)is worth 32 billion. COMS is trading at $65ish (22 billion) while its PALM holdings alone are worth $98 share (based on todays prices). IDTC owns NTOP....NTOP is worth more than IDTC. There are scores of these examples. Remember that as an incubator....TSSW will be dependant on capital gains...and the hope that they can continue to find investments from which to pluck these one times gains. TSSW may be a gem here...just make sure you have clear reasoning behind your decision to invest. Hoping for the market to throw some irrational exhuberance your way could prove to be hard on a portfolio.