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DST Systems (NYSE:DST) provides information processing and computer software services and products to the financial services industry. DST also operates two healthcare processing businesses collectively under the name DST Health Solutions ("DSTHS").The company was founded in 1968 and is based in Kansas City, MO.

DST maintains a substantial investment portfolio constituting over 50% of total assets and is almost 3 times total stockholders equity. As of June 30, 2008 this protfolio was valued at $1,740,900,000. Approximately $1,016,900,000 was accounted for by 3 companies that are publicly traded, State Street Corporation (NYSE:STT), Computershare (OTCPK:CMSQY) and Euronet Worldwide (NASDAQ:EEFT). Based on this past week's prices, and with only a few days to go until the end of the company's third quarter, it looks as if DST will face further writedowns in this portfolio to a carrying value of $889,000,000. Taken alone and not accounting for the other $726,000,000 of investments in its portfolio, this could result in a hit to stockholders equity of $127,900,000.

While DST is a solid company with operating cash flow of $207,000,000 for the 6 months ended June 30, 2008, they do have a negative working capital balance and stockholders equity accounts for only 20% of total capital compared to 34% at year end 2007.

Clearly the recent market decline in their protfolio is having a substantial impact on stockholders equity and book value per share.

Disclosure: Author is short DST and holds no other positions in the securities mentioned.

Source: Continuing Haircut in DST's Investment Portfolio