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

To: still learning who wrote (1690)	9/18/1998 7:16:00 PM
From: David Lawrence	Read Replies (1) \| Respond to of 4467

After thinking about this some more, I think the widening NAV actually make sense. I could be wrong about this, but it seems that SFE trades more like some closed-end mutual funds that I used to track - ones like Korea Fund and Brazil Fund. At first glance, the NAV vs. price behavior of these funds seems to run backwards. Typically, the spread between NAV and price will widen as the underlying securities drop in value, and the spread will narrow as the underlying stocks become more fully appreciated. This is the market's way of discounting expected future results of the underlying assets; it rewards more premium if the stocks have a greater potential for appreciation, less premium (or even a discount) if they are trading at the high end of historic ranges. I think that there have been a couple of instances where we have traded at a discount to NAV. It wouldn't surprise me in the least if that coincided with a couple of the major holdings making new highs in either price or historic PE ratio. I'll leave that for someone else to investigate. Let's face it - we're not the ones moving one or two hundred thousand shares a day. Whoever it is is using some sophisticated models showing not only NAV, but dollar weighted relative valuations, daily (hourly) PE's of the public portfolio, beta's, etc. It can be a lot more complicated than I even care to consider. However, if there are enough traders or institutions doing it, they could make a pretty decent living trading a relatively small amount of shares, as is often done in many closed end funds. The NAV of the public portfolio provides a measurable piece of valuation criteria not found in many common stocks. Just some food for thought. There's been a lot of thoughtful analysis on the subject of NAV and the spread - my apologies if I'm stating the obvious or rehashing old ground.