CET Central Securities Corp

 

CENTRAL SECURITIES CORPORATION

STATEMENT OF INVESTMENTS

September 30, 2023

(unaudited)

 

Shares						Value
COMMON STOCKS 91.4%
				Banks 2.4%
	200,000			JPMorgan Chase & Co.		$	29,004,000
				Communications Services 7.8%
	500,000			Alphabet Inc. Class A (a)			65,430,000
	100,000			Meta Platforms, Inc. Class A (a)			30,021,000
							95,451,000
				Diversified Financial 9.6%
	230,000			American Express Company			34,313,700
	300,000			Capital One Financial Corporation			29,115,000
	700,000			The Charles Schwab Corporation			38,430,000
	65,000			Visa Inc. Class A			14,950,650
							116,809,350
				Diversified Industrial 3.2%
	450,000			AerCap Holdings N.V. (a)			28,201,500
	200,000			Brady Corporation Class A			10,984,000
							39,185,500
				Energy 4.6%
	365,000			Hess Corporation			55,845,000
				Health Care 4.9%
	90,000			Johnson & Johnson			14,017,500
	185,000			Medtronic plc			14,496,600
	200,000			Merck & Co., Inc.			20,590,000
	300,000			Roche Holding AG ADR			10,179,000
							59,283,100
				Insurance Brokers 4.0%
	150,000			Aon plc Class A			48,633,000
				Insurance Underwriters 28.3%
	28,424			The Plymouth Rock Company Class A (b)(c)			284,240,000
	435,000			Progressive Corporation			60,595,500
							344,835,500
				Real Estate 2.8%
	1,000,000			Kennedy-Wilson Holdings Inc.			14,740,000
	700,000			Rayonier Inc.			19,922,000
							34,662,000

 

 

Shares						Value
				Retailing 3.5%
	225,000			Amazon.com, Inc. (a)		$	28,602,000
	11,000			Mercadolibre, Inc. (a)			13,946,680
							42,548,680
				Semiconductor 8.0%
	440,000			Analog Devices, Inc.			77,039,600
	400,000			Intel Corporation			14,220,000
	170,000			Wolfspeed, Inc., Inc. (a)			6,477,000
							97,736,600
				Software and Services 4.2%
	80,000			Microsoft Corporation			25,260,000
	54,000			Roper Technologies, Inc.			26,151,120
							51,411,120
				Technology Hardware and Equipment 8.1%
	400,000			Coherent Corp. (a)			13,056,000
	200,000			Keysight Technologies, Inc. (a)			26,462,000
	170,000			Motorola Solutions, Inc.			46,280,800
	30,000			Teledyne Technologies Incorporated (a)			12,257,400
							98,056,200
				Total Common Stocks (cost $397,230,427)			1,113,461,050
				SHORT-TERM INVESTMENTS 6.5%
Principal				U.S. Treasury Bills 6.5%
$	80,000,000			U.S. Treasury Bills 5.359% - 5.367% due 10/12/23 - 10/24/23 (d)			79,801,411
				Total Short-Term Investments (cost $79,801,411)			79,801,411
				Total Investments (cost $477,031,838) (97.9%)			1,193,262,461
				Cash, receivables and other assets less liabilities (2.1%)			25,645,002
				Net Assets (100%)		$	1,218,907,463

 

(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, 2023, the tax cost of investments was $477,031,838. Net unrealized appreciation was $716,230,623 consisting of gross unrealized appreciation and gross unrealized depreciation of $730,644,403 and $14,413,780, 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, 2023 are classified as follows:

 

		Level 1				Level 2				Level 3				Total
Common stocks		$	829,221,050				—			$	284,240,000			$	1,113,461,050
Short-term investments			—				79,801,411				—				79,801,411
Total investments		$	829,221,050			$	79,801,411			$	284,240,000			$	1,193,262,461

 

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

 

Balance at December 31, 2022		$	258,658,400
Change in net unrealized appreciation of investments in affiliated companies included in net increase in net assets resulting from operations			25,581,600
Balance at September 30, 2023		$	284,240,000

 

Unrealized appreciation of Level 3 investments held as of September 30, 2023 increased during the nine months ended September 30, 2023 by $25,581,600, which is included in the above table.

 

Management assists the Board of Directors in the determination of fair value of Plymouth Rock. In valuing the Plymouth Rock Level 3 investment as of September 30, 2023, 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: 1.0–2.0; average: 1.3); price-to-historical earnings (range: 10.0–39.7; average: 23.0); and price-to-forward earnings estimates (range: 24.1–36.6; average: 28.6). 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 12%. The average of these values was then discounted for lack of marketability and control of the Plymouth Rock shares. Management considered a discount range of 25% to 40%, a range management believes market participants would apply. An independent valuation of Plymouth Rock’s shares obtained by Plymouth Rock was also considered. Management presented and discussed the above information with the Corporation’s directors, who determined the value for the investment.

 

 

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. 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, 2023, 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 $284,240,000 at September 30, 2023, which was equal to 23.3% 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, 2023, unrealized appreciation from the Corporation’s investment in Plymouth Rock increased by $25,581,600 and the Corporation received dividends of $7,224,244 from Plymouth Rock. The Chairman of the Corporation is a director of Plymouth Rock. The Chief Executive Officer of the Corporation is a director of certain subsidiaries of Plymouth Rock.

 

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