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allencar

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  • Firsthand Technology Value Fund: Time To Take A Short Position [View article]
    Very good article. I just wish you had published it two days before.

    I learned of SVVC on Tuesday and did some research. I was interested in Firsthand since I owned their open end funds during the internet bubble. At one time they were my largest discretionary holding.

    Here are some facts from the 10-K of SVVC. I am not an expert on reading 10-Ks so please tell me if I made any significant errors.

    On 4-15-2011 (the start of business as a Business Development Company) they had 8 investments with a market value of $19.3M and $69.4M in cash or 22% invested and 78% cash.

    On 12-31-11 the total investments equaled $15.5M, they did not sell any securities during 2011. They did buy more during the year for a total investment of $23.6M. Their investments were not very successful since they had a 34% loss on their investments by the end of the year. $23.5M invested with a net value of $15.5M. Not good. Two investments went to zero or near zero.

    They were still sitting on $68M in cash with only 19% invested. Why? Are they being paid 2% annually to keep cash. This is a real expensive way to invest mainly in cash.

    Since then they have purchased 550,000 additional shares of Facebook for a total of 600,000 shares. Let's assume that they paid the average price between the 12-31-11 price and the $43.5 quoted above. That equals to an additional $21.2M invested in Facebook and it is now worth $26.1M. (That would be a good return. ) I did not include the April 2 anouncement concerning SolarCity in the analysis since no valuation numbers were presented with the number of shares purchased. They have not announced any other purchases (like they did for Facebook) so ignoring SolarCity; the balance of the portfolio has not changed. That mean they have $40.1M invested and ~$47M in cash.

    At the high today of $44.99 and the 3,496,480 outstanding shares; the market cap was $157M. In order to determine the premium for the invested portfolio we need to subtract out the $47M in cash. (I am going to be kind and include all the investment portfolio in determining the premium even though their 34% loss in 2011 shows that is being generous.) [($157M market cap - $47M cash) / $40.1M portfolio value] -1 = 1.74 or a 174% premium on the invested portfolio. Wow!

    After re-reading all the other comments I did not account for any appreciation in Yelp purchases (which might drop the premium to 150%); but the basic analysis stands.

    The Bid/Ask spread is also large on SVVC. Several times when I looked it was ~1.5% between the bid and ask prices. The low volume is also a killer for novice investors that place market orders. On Tuesday, I saw 3112 shares traded in one minute increase the price by 4.2%. It was probably a Market order. It fell back 2/3 of the jump in the subsequent minutes. (I have learned this lesson on thinly traded closed end funds when one of my sales were 1/6 of the total day's volume.)

    If this was on the Pink Sheets; I would be thinking "Pump and Dump".

    (Disclosure: I purchased 1100 shares of GSVC on Tuesday hoping the mania and would rub off on it since it owns 2/3s the amount of Facebook as SVVC. Today when I saw the bubble burst on SVVC I sold GSVC with a 1% loss.)
    Apr 5 05:12 PM | Likes Like |Link to Comment
  • Funds That Own Facebook Stock [View article]
    I learned of SVVC yesterday and did some research. I was interested in Firsthand since I owned their open end funds during the internet bubble.

    Here are some facts from the 10-K of SVVC.

    On 4-15-2011 (the start of business) they had 8 investments with a market value of $19.3M and $69.4M in cash or 22% invested and 78% cash.

    On 12-31-11 the total investments equaled $15.5M, they did not sell any securities during 2011. They did buy more during the year for a total investment of $23.6M. So they had a 34% loss on their investments from 4-15-2011 to 12-31-2011. Not good. Two went to zero or near zero. And they still only have 19% invested; the reset is in CASH. Their initial trading price was $27.01 which went down to $14.25. This is a real expensive way to invest mainly cash.

    Since then they have purchased 550,000 shares of Facebook for a total of 600,000 shares; or $18.6M at 12-31-11 values. (Does anybody know what were the last private auction trades for Facebook?) So they probably have $32.6M invested of the total $83.6M NAV or 39% invested. No other purchase announcements. So >1/2 of their investments are in Facebook; but 2/3 is still in cash.

    The Bid/Ask spread is also large on SVVC. Yesterday, I saw 3112 shares traded in one minute increase the price by 4.2%. It was probably a Market order.
    If this was on the Pink Sheets; I would be thinking "Pump and Dump".


    The 2nd fund GSVC has almost all of their money invested; at least on 12-31-11. On 2-15-2012 they had a secondary offering which more than doubled the AUM. From the year end numbers; Groupon is their only big loser. GSVC also trades about 8 times more volume and much narrower spread. This looks like a better investment.

    (Disclosure: I purchased 1100 shares of GSVC yesterday and the bubble run of SVVC continues; what do facts mean to investing.)
    Apr 4 01:52 PM | Likes Like |Link to Comment
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