BusinessWeek: January 10, 2000

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 BusinessWeek Investor -- Inside Wall Street

A Safety Net for Safeguard

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A Safety Net for Safeguard

CHART: Still Room to Grow


When Safeguard Scientifics (SFE) was first highlighted in this column on Feb. 8, 1999, it was a little-known "incubator" of Internet stocks. Trading then at 37 a share, Safeguard has since become a big hit with investors: Its stock zoomed as high as 178 on Dec. 21, before easing to 163 on Dec. 28. But don't think that Safeguard, a holding company of Internet-related companies, has peaked, says Stuart Rudick of Rudick Asset Management in Mill Valley, Calif. He says Safeguard is still undervalued, based on its stakes in 14 publicly traded Net companies and in 200 companies still privately held.

"Safeguard is trading at a 28% discount to its holdings in Internet stocks alone," says Rudick. Among them: Internet Capital Group, which it helped found in 1996 and took public in August, 1999, at a split-adjusted 6 a share. ICG, now trading at 177, has a market value of $4.6 billion. Safeguard, with a $5.6 billion market cap, owns 14% of ICG. Others that Safeguard helped go public: Cambridge Technology Partners and Novell. "Safeguard has a proven ability to identify and acquire stakes in promising early-stage technology companies," says Bob Hiler of Credit Suisse First Boston, who rates it a buy.

By Gene G. Marcial

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