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publicly traded investment companies that specialized in
restricted securities. The study found mean marketability
discounts of 33 percent after analyzing 89 restricted stock
investments by the four investment companies. The second study,
Moroney, "Most Courts Overvalue Closely Held Stocks", 51 Taxes
144 (Mar. 1973), is based on 10 registered investment companies
that held a total of 146 blocks of restricted equity securities.
The Moroney study found an average discount on the restricted
stock transactions of 35.6 percent. The third study, Maher,
"Discounts for Lack of Marketability for Closely Held Business
Interests", 54 Taxes 562 (Sept. 1976), is based on reports filed
with the Securities and Exchange Commission by four mutual fund
companies reporting their restricted stock transactions. The
Maher study found a mean discount of 34.73 percent. The final
study cited was an IPO study, Emory, "The Value of Marketability
as Illustrated in Initial Public Offerings of Common Stock
February 1992 through July 1993", Bus. Valuation Rev. 3 (Mar.
1994). The Emory study found an average marketability discount
of 46 percent after comparing the share price in private
transactions that occurred within 5 months of an IPO by the same
corporation. We find petitioners’ reliance on the restricted
stock studies to be misplaced, since those studies analyzed only
restricted stock that had a holding period of 2 years. Inasmuch
as we expect the investment time horizon of an investor in the
stock of a closely held corporation like FIC to be long term, we
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