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Technology Stocks : Safeguard Scientifics SFE -- Ignore unavailable to you. Want to Upgrade?

To: John Arnopp who wrote (1078)	2/7/1998 9:48:00 AM
From: ncs	Respond to of 4467

John, I tried to cut an paste my Lotus spreadsheet---but nothing lined up and it would have been impossible to read. Bottom line, I got a NAV of $32.93, which is pretty much in line with you. We have three differences which I can see. The first is the outstanding shares of SFE, I used 31,267,341 verses your 31,235,716. I pulled mine from the latest Valueline. The other two differences are in SFE's holdings of National Media and Brandywine. I took the numbers posted on SFE's website. As I suspect yours came for the perspective companies 10Q, yours are probably more accurate. I think we agree on everything else. BTW Valueline gives SFE a strong writeup. They estimate the private companies to have a value ranging from $200MM - $250MM, or $6-$8 per share. They project and average annual return of between 12%-24% through 2002 and peg the stock price from $50 to $75 for 2002. I suspect they're a little on the low side, but they tend to be conservative. I'm looking forward to the annual report, cause that seems to be the only time you get a fair amount of information on the funds and the private companies. From last years report, I had estimated that SFE had $43.9MM or $1.40 per share, invested in the funds. I kinda think that the private companies of which there are around 20 could be valued at $0.33 each, since they're worth $1.00 to the shareholders at the time they are spun out. Figure at least half of them will eventually get spun out and discount that for the time it takes to get them spun out. Hence IMO SFE is worth a hard $32.63 using your NAV, plus $1.40 and $6.60 or $40.63. Plus the upside potential from my underestimation of the private companies' worth and the value of their management and system for bring the companies public. I guess another way of valuing the company would just to appreciate the stock at its 10 year average and then apply a reasonable discount and get the NPV. I'll try that later and post it just for the fun of it. Talk to you later Neil

To: John Arnopp who wrote (1078)	2/7/1998 10:42:00 AM
From: ncs	Read Replies (2) \| Respond to of 4467

The follow table illustrates SFE's perceived value based on growth rate and various discounts. The top line is the growth rate variables with the left side column being various discounts. The field is the resultant NPV for SFE: 30% 25% 20% 15% 5% 227.45 143.77 85.37 45.21 7.5% 169.34 104.74 59.66 28.66 10% 125.52 75.36 40.35 16.28 12.5% 92.31 53.13 25.80 6.99 15% 66.99 36.23 14.76 0 Calculations were based on a 10 year holding period. Pursuant to last year's annual report, SFE had a 10 year return of 30%, a five year retyurn of 81%, a three year return of 114% and a two year return of 162%. I believe CEO Musser stated ( at the Groundhog Day symposium) that the latest two year return was 20%. IMO I'd pick the 30% return with a 10% discount, which would value the stock at 125.52.