My current analysis
From 6/30/07 to 9/30/07 the NAV decreased from $11.15/share down to $10.54. That's a significant decrease of about 5.5%, and probably helps explains the recent share price decline. (I wonder exactly how they came up with those numbers? Could it have had anything to do with the Florida real estate holdings listed on their web site?) Investors want to see net asset values increase, not decrease, that's for sure.
ON THE OTHER HAND:
The NAV has actually INCREASED 12.31% over the last year, so in the face of that, a 5.5% decrease over the last quarter doesn't look so bad. Time will tell if this is nothing more than a small bump in the road, or the beginning of a downward trend. I guess we'll just have to wait until the next quarter to see for ourself.
The stock price has fallen so far, it is now selling at an incredible 40% discount to the net asset value. You could argue that the net asset value is rather subjective, given the nature of the small company private holdings, but a 40% discount really catches my eye. On the other hand the significant discount to NAV has been in place for a LONG time, and it would take a considerable change in investor sentiment to turn that around. In other words, don't expect to see this thing trading for a premium to its NAV anytime in the foreseeable future. A recent decrease in the NAV certainly doesn't help matters.
The other obvious attraction to this stock is the dividend. If they can maintain a 12.5 cent quarterly dividend, at today's stock price that equates to an incredible yield of almost 8%. That would make it very attractive for fixed income investors. I don't think the dividend is in much danger, given that they have about $4.08/share in cash. (Not bad for a stock that last sold at $6.29, eh? Maybe they're waiting on the sidelines to invest in the next big opportunity - not a bad strategy in today's volatile market.)
I don't know if I would touch this baby right now, but it looks tempting. We're going to be getting into tax loss selling season, and this baby is a prime candidate for year end selling, especially since we went ex-dividend on November 15th. The whole stock market is also very nervous right now, and small cap stocks haven't really gone anywhere this year. If we do get into a recession, the odds of which seemed to have increased lately, small company stocks could be hit even harder.
One thing for sure, this is a very lightly traded fund. On Friday there was only 6300 shares traded, roughly $40K worth. That makes it hard to place a big bet without driving the price up. On the other hand with such light trading, more tax loss selling could really have a further significant negative impact.
My own opinion is the juicy dividend is the only thing keeping this thing alive. I don't know when the best time to get into this stock is, but it would seem to me that if the markets remain volatile, the last week of the year might be a good opportunity, after the majority of tax loss selling takes place. But, at some point that dividend is going to become so attractive that investors won't be able to stay away from it. Hard to say.
Good luck to all.
