James Ryans, CFA
Long/short equity, value, special situations

Undervalued Closed End Fund Has Hidden Net Asset Value: Central Securities

Central Securities Corporation (NYSEMKT:CET) is a closed end fund whose Net Asset Value (or "NAV") may be understated because of an undervalued nonpublic investment. Valuing this investment using the company's independent appraisal would result in $1.01 to $2.26 higher NAV for CET per share and an upside to the current market price of between 26% and 32%.

Central Securities Corporation is a venerable closed end fund established in 1929. Previous articles have described this fund in detail, but the current situation has two characteristics of interest to value investors: the discount to NAV, and management's conservative estimates used in producing the NAV.

CET trades at a discount of 19% to the reported NAV, a significant bargain at which...

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