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

To: John Arnopp who wrote (2554)	4/12/1999 12:48:00 PM
From: still learning	Read Replies (1) \| Respond to of 4467

Oops is right. But still, you've got to get away from the NAV view. Problem is, if you don't own SFE, you'll never get in on the ICG IPO. Are you willing to buy at open? At $40, $50, etc.? In effect you own ICG in order to be eligible for the highly discounted IPO price, which is effectively the same as a rights offering. The ultimate value of ICG will determine what your dividend was, not the SFE NAV. The NAV will start to catch up with current trading price as more SFE companies go public, but the reality is it may never come back into balance. SFE may go up $2 for every $1 that is added in NAV, simply because the market assumes some future capital gains each time it sees another home run. Another way to look at this is: If SFE had, before ICG, hit only home runs and every company they brought public was trading at 30X IPO price, you can bet the private companies would have been valued much more highly. But since that hasn't happened and for every CATP or NOVL, there have been some USDCs, the market doesn't know how to value the private cos. Along come ICG, which holds a bunch of internets, which the market reads as blue-chips-to-be. Even though they're indirectly held, they're seen as highly valuable private companies, and the stock price adjusts accordingly. Where's the right balance? Where should SFE end up? I don't know. I still expect SFE may be able to reach $140-$150 this year. And longer term (2-3 yrs), I wouldn't be surprised to see it at $200-$300 if it continues to bring out home runs. As that happens, our familiar measures, such as NAV become less and less useful.

To: John Arnopp who wrote (2554)	4/12/1999 12:55:00 PM
From: Katherine Derbyshire	Read Replies (1) \| Respond to of 4467

I think we can all agree that SFE is no longer being valued based on the NAV, but rather on future potential of both SFE and the partner companies. Since Internet companies don't, in general, have any earnings, you can dream up any scenario you want to justify any price you want. Ditto for SFE and ICG. Me, I'm just enjoying the ride. I bought because of the rights offerings, but the performance of SFE itself has made my selling plans more technically-oriented. Rights or no rights, I'll sell and preserve my current profits rather than hold on while SFE returns to a "reasonable" NAV-based valuation. Shifting out of SFE and into ICG (for instance) seems like a better way to manage my finite capital than settling for the relatively small ICG holding (even if that holding is discounted) that I'd be entitled to as an SFE shareholder, especially if (as I expect) SFE plunges back to its NAV after ICG comes out. Katherine