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High-Flying Fund More Than Doubles in 'Lost Decade' for Stocks

Stocks in this article: MRSCX MSGIX GPOR EBIX SFE

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Safeguard Scientifics (SFE)

Company Profile: Safeguard Scientifics provides growth capital for entrepreneurial and innovative life sciences and technology companies.

Share Price: $13.28 (Sept. 26)

Performance Since July 25: -27.5%

Gundlach's View: Gundlach views Safeguard Scientifics not as a bank but as a cross between a venture-capital firm and a private-equity shop. What attracted Gundlach, though, was the increasing rate of revenue growth.

Revenue growth of their partner companies is up substantially," he says. "In 2007, their partner companies had $100 million in aggregate revenue, which grew to $400 million in 2010."

Safeguard Scientifics currently has minority stakes of 20% to 40% in 13 companies, such as pharmaceutical company NuPathe, Internet career site and digital media trading technology provider MediaMath. Safeguard represents a solid investment for Gundlach and his team because these 13 business have been performing very well.

"Right now, the stock price of Safeguard is barely trading higher than the net cash on their balance sheet," Gundlach points out. "Effectively, you're getting their ownership stakes in 13 different companies for free, a variety of which are pretty exciting investment opportunities."

>>To see these stocks in action, visit the 3 Beaten-Down Small-Cap Growth Stocks portfolio on Stockpickr.

-- Written by Robert Holmes in Boston.

>To contact the writer of this article, click here: Robert Holmes.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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