To: wellab1 who wrote (2721 ) 4/28/1999 4:51:00 PM From: michael r potter Read Replies (2) | Respond to
SFE does not have operating earnings like most companies. Their earnings are the result of selling current holdings above the cost basis, or marking TLAB to the market each quarter. PE ratio truly is not relevant. Approximately $30 per share of SFE's price is their holding of public companies and holdings in now private non-internet companies. The other $50 + is the markets perceptions of what the market feels is the current worth of their internet private holdings. Thus, SFE is now primarily valued as an internet stock. The biggest driver of its stock price up or down going forward will be the markets changing perceptions of how much those private internet stakes are worth. The biggest factor driving those perceptions is how current publicly traded internet companies are valued. If there is a more sober assessment of those valuations [which appears underway] that have been placed on the average I-net company and it is reflected in the stock prices[s], then it will reflect on the value of SFEs private companies and their perceived value will be market down accordingly. The emerging shift to value is not good news for internet stocks or by implication SFEs stock price as as they are tied at the hip. By the way, at the close Alcoa + $6 7/8 to $62 1/4, Barrick ABX cleared $20, and Dow Chemical + $9 This shift to value is not over. Update: Night-Trimark NITE $134 + $7 1/8. Up 50% from their explosive earnings report one week ago. CEO interview indicates they think they will process 1M trades per day next year, vs app. 400,000 to 500,000 trades per day now. This is the single most exciting situation I have seen since SFE was in the $30s. After this move up, Southwest Securities SWS $46 1/8, probably the safer way to play, as their 1.7 M sh of NITE now worth app. $22.70 per sh. alone. NITE does not affect their operating earnings as they have a minority interest. SWS operating earnings blew away estimates as reported in an earlier post. Backing out their interest in NITE, SWS PE very low-a value stock tied to the increase in internet trading. Caution, both volatile stocks. Mike
