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

To: Rick who wrote (1662)	9/16/1998 9:21:00 PM
From: still learning	Read Replies (1) \| Respond to of 4467

Rick, my answers: 1) What is the general holding period, by policy or contract, that SFE maintains shares ? Are there any examples of companies that they have sold out all shares ? -- VCs don't have holding periods, they can sell whenever they want. As a matter of course, they do not exit quickly. Often they stay because they think the company has years of grwth ahead and they know them well. They sold all of NOVL, well timed, but probably not at its peak. They have sold whole companies without taking them public, but have not exited any company completely in the 7-8 years I've been following them. Others on this thread have calculated that, even if they never sold a share, they would have done very well -- even with companies like CATP that have come down lately. 2) What value should I place on the business, excluding it's holdings of shares ? -- None. That's like valuing a VC fund for its "ongoing revenue stream" It's only revenue is its investments. 3) How should I discount the shares in cases where the SFE holdings are significantly greater than the existing float ? For example, I think the TESI holding is 5 times greater than the public float. It would seem prudent to be a little conservative in valuation, here. -- You shouldn't discount, except maybe for capital gains. Assuming an orderly sale and no dumping, there's no reason to think they would ever depress the market. some people place a premium on owning a controlling interest in a company. If SFE were a mutual fund that has to sell when people liquidate, then you might have to discount. But they're not a closed end fund or a mutual fund. 4) Should we look to closed end mutual funds for guidance on valuation ? Are there any closed end technology funds that might be used for comparison ? -- See above. More likely comp is TMO which serves as an incubator to other companies and spins them off. 5) Assuming we continue in a difficult market (bear market, if you prefer), how should this impact valuation and/or the general business of incubating high tech companies ? -- Bear market wouldn't impact valuation of non-public co's. It might delay IPOs (some think it already has). WRT small caps, most are already down 50-80% YOY, so most of the discoun't already there. The widespread bear market IMHO will have little add'l impact on small caps because they are sooooo depressed already. Same re most tech cos. I am certainly not very knowledgable about how SFE does business, but my gut tells me that this is not a great time to own this company, and especially if there is a significant premium over the NAV. It seems like a technology focused mutual fund, undiversified and with too many eggs in too few baskets. Thoughts anyone ? -- NAV premium will go away one way or another. $64 question is -- did they already sell some TLAB or CATP, and it's really an "accurate" share price -- and we just don't know it. Or, will the small cap techs finally rally from 12 and 18-month doldrums and NAV comes up to meet the trading price. Or, will the share price drop and eliminate the gap. It's almost certainly one of these ;}.