NPORT-EX 2 cet_nportex.htm STATEMENT OF INVESTMENTS
 

 

CENTRAL SECURITIES CORPORATION
STATEMENT OF INVESTMENTS
September 30, 2021
(unaudited)

 

 Shares       Value   
    COMMON STOCKS 94.7%    
  Banks 2.9%    
230,000   JPMorgan Chase & Co. $ 37,648,700  
         
  Communications Services 9.4%    
 25,000   Alphabet Inc. Class A (a) 66,838,000  
325,000   Cogent Communications Holdings, Inc. 23,023,000  
100,000   Facebook, Inc. Class A (a) 33,939,000  
      123,800,000  
         
  Diversified Financial 11.7%    
270,000   American Express Company 45,233,100  
320,000   The Bank of New York Mellon Corporation 16,588,800  
300,000   Capital One Financial Corporation 48,591,000  
600,000   The Charles Schwab Corporation 43,704,000  
      154,116,900  
         
  Diversified Industrial 4.1%    
240,000   Brady Corporation Class A 12,168,000  
600,000   Heritage-Crystal Clean, Inc. (a) 17,388,000  
 54,000   Roper Technologies, Inc. 24,091,020  
      53,647,020  
         
  Energy 3.2%    
545,000   Hess Corporation 42,569,950  
         
  Health Care 5.0%    
 90,000   Johnson & Johnson 14,535,000  
185,000   Medtronic plc 23,189,750  
200,000   Merck & Co., Inc. 15,022,000  
300,000   Roche Holding AG ADR 13,641,000  
      66,387,750  
         
  Insurance Brokers 3.2%    
150,000   Aon plc Class A 42,865,500  
         
  Insurance Underwriters 25.2%    
 28,424   The Plymouth Rock Company Class A (b)(c) 292,767,200  
435,000   Progressive Corporation 39,319,650  
      332,086,850  

 

   
 

 

 

 Shares       Value   
  Real Estate 3.7%    
1,000,000   Kennedy-Wilson Holdings Inc. $ 20,920,000  
800,000   Rayonier Inc. 28,544,000  
      49,464,000  
         
  Retailing 3.2%    
 11,000   Amazon.com, Inc. (a) 36,135,440  
4,000   Mercadolibre, Inc. (a) 6,717,600  
      42,853,040  
         
  Semiconductor 8.4%    
445,000   Analog Devices, Inc. 74,528,600  
170,000   Cree, Inc. (a) 13,724,100  
420,000   Intel Corporation 22,377,600  
      110,630,300  
         
  Software and Services 1.9%    
 90,000   Microsoft Corporation 25,372,800  
         
  Technology Hardware and Equipment 12.3%    
160,000   Coherent, Inc. (a) 40,014,400  
320,000   II-VI Inc. (a) 18,995,200  
200,000   Keysight Technologies, Inc. (a) 32,858,000  
 80,000   MKS Instruments, Inc. 12,072,800  
250,000   Motorola Solutions, Inc. 58,080,000  
      162,020,400  
         
  Utilities 0.5%    
660,000   Star Group, L.P. 6,725,400  
         
    Total Common Stocks (cost $401,434,022)   1,250,188,610  
         

       SHORT-TERM INVESTMENTS 5.3%     
           
    Money Market Fund 3.0%    
  40,320,498   Fidelity Investments Money Market Fund     
      Treasury Only Portfolio - Class I 40,320,498  
           
  Principal U.S. Treasury Bills 2.3%    
$ 29,998,900   US Treasury Bill, 0.054% due 10/26/2021 (d) 29,998,900  
      Total Short-term Investments (cost $70,319,398) 70,319,398  
           
           
      Total Investments (cost $471,753,420) (100.0%)   1,320,508,008  
           
      Cash, receivables and other assets less liabilities (0.0%)   (82,676)  
           
      Net Assets (100%) $  1,320,425,332  
           

 

 (a) Non-dividend paying. 
 (b) Affiliate as defined in the Investment Company Act of 1940 and restricted.  See Note 3 and Note 4. 
 (c) Valued based on Level 3 inputs.  See Note 2. 
 (d) Valued based on Level 2 inputs.  See Note 2. 

 

See accompanying notes to statement of investments.

 

   
 

 

CENTRAL SECURITIES CORPORATION

(the “Corporation”)

 

NOTES TO STATEMENT OF INVESTMENTS

(unaudited)

 

1. Security Valuation – Marketable common stocks are valued at the last or closing sale price or, if unavailable, at the closing bid price. Investments in money market funds are valued at net asset value per share. Other short-term investments are valued at amortized cost, which approximates fair value. Securities for which no ready market exists are valued at estimated fair value pursuant to procedures adopted by the Board of Directors. The determination of fair value involves subjective judgments. As a result, using fair value to price a security may result in a price materially different from the price used by other investors or the price that may be realized upon the actual sale of the security.

 

As of September 30, 2021, the tax cost of investments was $471,753,420. Net unrealized appreciation was $848,754,588 consisting of gross unrealized appreciation and gross unrealized depreciation of $852,467,585 and $3,712,997, respectively. 

 

2. Fair Value Measurements – The Corporation’s investments are categorized below in three broad hierarchical levels based on market price observability as follows:

●Level 1 – Quoted prices in active markets for identical investments;
●Level 2 – Other significant observable inputs obtained from independent sources, for example, quoted prices in active markets for similar investments;
●Level 3 – Significant unobservable inputs including the Corporation’s own assumptions based upon the best information available. The Corporation’s only Level 3 investment is The Plymouth Rock Company Class A Common Stock (“Plymouth Rock”).

 

The designated Level for a security is not necessarily an indication of the risk associated with investing in that security.

 

The Corporation’s investments as of September 30, 2021 are classified as follows:

 

    Level 1   Level 2   Level 3   Total  
Common stocks   $ 957,421,410     —    $ 292,767,200   $ 1,250,188,610  
Short-term investments     40,320,498   $ 29,998,900     —     70,319,398  
Total investments   $ 997,741,908   $ 29,998,900   $ 292,767,200   $ 1,320,508,008  

 

The following is a reconciliation of the change in the value of Level 3 investments:

 

Balance at December 31, 2020 $ 221,707,200
Change in net unrealized appreciation  
of investments in affiliated companies  
included in net increase in net assets  
resulting from operations 71,060,000
Balance at September 30, 2021 $ 292,767,200

 

Unrealized appreciation of Level 3 investments held as of September 30, 2021 increased by $71,060,000 during the nine months ended September 30, 2021, which is included in the above table.

 

In valuing the Plymouth Rock Level 3 investment as of September 30, 2021, management considered Plymouth Rock’s financial condition and results of operations, the insurance industry outlook, and any transactions in Plymouth Rock’s shares. Management used significant unobservable inputs to develop a range of values for the investment. It used a comparable company approach that utilized the following valuation multiples from selected publicly traded companies: price-to-book value (range: 0.7–1.5; average: 1.2); price-to-historical earnings (range: 15.5–38.4; average: 24.3); and price-to-forward earnings estimates (range: 8.4–32.0; average: 19.0). Management also used Plymouth Rock’s book value and a discounted cash flow model based on a forecasted return on equity of approximately 11% and a cost of capital of approximately 10%. The average of these values was then discounted for lack of marketability and control of the Plymouth Rock shares. Management used a discount range of 30% to 40%, a range management believes market participants would apply. Management presented and discussed the above information with the Corporation’s directors, who approved the value for the investment.

 

   
 

 

Significant increases (decreases) in the price-to-book value multiple, price-to-historical earnings multiple, price-to-forward earnings estimate multiple, return on equity rate and book value in isolation would have resulted in a higher (lower) range of fair values. Significant increases (decreases) in the discount for lack of marketability and control or cost of capital in isolation would have resulted in a lower (higher) range of fair values.

 

3. Restricted Securities - The Corporation may from time to time invest in securities the resale of which is restricted. On September 30, 2021, the Corporation’s only restricted security consisted of 28,424 shares of Plymouth Rock that were acquired on December 15, 1982 at a cost of $710,600. This security had a value of $292,767,200 at September 30, 2021, which was equal to 22.2% of the Corporation’s net assets. The Corporation does not have the right to demand registration of this security.

 

4. Affiliated Companies – Plymouth Rock is an affiliated company as defined in the Investment Company Act of 1940 due to the Corporation’s ownership of 5% or more of the company’s outstanding voting securities. During the nine months ended September 30, 2021, unrealized appreciation from the Corporation’s investment in Plymouth Rock increased by $71,060,000 and the Corporation received dividends of $16,800,858 from Plymouth Rock. The Chief Executive Officer of the Corporation is a director of Plymouth Rock. The President of the Corporation is a director of certain subsidiaries of Plymouth Rock.