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Grenfell Smallcap held investments in small-cap funds and that
Central Securities Corp. held less diversified investments. Both
strategies would appear riskier than CCC’s strategy of investing
in a diversified base of large-cap stocks and limiting its
holdings to no more than 25 percent of its total assets in a
single industry. CCC’s investment strategy was more comparable
to that of a diversified stock fund like Salomon Brothers Fund,
which invested in listed NYSE securities. We note that in Mr.
Frazier’s analysis, Salmon Brothers Fund was discounted only 7.3
percent.
We also note that Mr. Frazier did not justify or adequately
explain why he limited his comparison to the two funds with the
highest discounts (18.3-percent average). We find it curious
that his analysis purports to compare CCC to either three or
seven companies, when actually the final universe he selected was
smaller. We also note that Mr. Frazier did not explain or
justify increasing the discount rate from the 18.3-percent
average of these two to 20 percent. Finally, though Mr. Frazier
did show that CCC’s short-term rate of return was lower than
those of the selected companies, CCC had a long-term investment
strategy and, on average, out-performed the comparables in that
respect.
In addition, we are unable to agree with Mr. Frazier’s
assumption that the discounts reflected in the comparable
companies he selected are due solely to lack of control. Part of
the discount may be due to lack of marketability. In that
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