United States
Securities and Exchange Commission
Washington, DC 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number 811-00179
Central Securities Corporation
(Exact name of registrant as specified in charter)
630 Fifth Avenue, Eighth Floor
New York, N.Y. 10111
(Address of principal executive offices)
Registrant’s telephone number including area code: 212-698-2020
Date of fiscal year end: December 31
Date of reporting period: March 31, 2011
Item 1. Schedule of Investments.
CENTRAL SECURITIES CORPORATION
Statement of Investments
March 31, 2011
(Unaudited)
COMMON STOCKS 99.1%
|
Shares
|
Value | ||||
| Banking and Finance 4.7% | |||||
|
675,000
|
The Bank of New York Mellon Corporation | $ | 20,162,250 | ||
|
171,600
|
Home Federal Bancorp, Inc. | 2,021,448 | |||
|
100,000
|
JPMorgan Chase & Co. | 4,610,000 | |||
|
278,900
|
NewStar Financial, Inc. (a) | 3,045,588 | |||
|
|
|
||||
| 29,839,286 | |||||
|
|
|
||||
| Commercial Services 0.9% | |||||
|
413,712
|
Heritage-Crystal Clean Inc. (a) | 5,895,396 | |||
|
|
|
||||
| Diversified Industrial 11.6% | |||||
|
750,000
|
Brady Corporation Class A | 26,767,500 | |||
|
300,000
|
Carlisle Companies Inc. | 13,365,000 | |||
|
200,000
|
General Electric Company | 4,010,000 | |||
|
100,000
|
Precision Castparts Corporation | 14,718,000 | |||
|
180,000
|
Roper Industries, Inc. | 15,562,800 | |||
|
|
|
||||
| 74,423,300 | |||||
|
|
|
||||
| Energy 11.8% | |||||
|
350,000
|
Canadian Oil Sands Ltd. | 11,770,500 | |||
|
200,000
|
Devon Energy Corporation | 18,354,000 | |||
|
2,000,000
|
GeoMet, Inc. (a)(b) | 3,280,000 | |||
|
660,000
|
McMoRan Exploration Co. (a) | 11,688,600 | |||
|
280,000
|
Murphy Oil Corporation | 20,557,600 | |||
|
252,300
|
QEP Resources, Inc. | 10,228,242 | |||
|
|
|
||||
| 75,878,942 | |||||
|
|
|
||||
| Health Care 2.6% | |||||
|
120,000
|
Abbott Laboratories | 5,886,000 | |||
|
100,000
|
Johnson & Johnson | 5,925,000 | |||
|
100,000
|
Medtronic, Inc. | 3,935,000 | |||
|
270,000
|
Vical Inc. (a) | 799,200 | |||
|
|
|
||||
| 16,545,200 | |||||
|
|
|
||||
| Insurance 26.2% | |||||
|
70,000
|
The Plymouth Rock Company, Inc. Class A (b)(d) |
168,000,000
|
|||
|
|
|
||||
| Retailing 1.5% | |||||
|
20,000
|
Aerogroup International, Inc. (a)(d) | 455,000 | |||
|
230,000
|
Walgreen Co. | 9,232,200 | |||
|
|
|
||||
| 9,687,200 | |||||
|
|
|
||||
|
Shares
|
Value | ||||
| Semiconductor 13.1% | |||||
|
684,900
|
Analog Devices, Inc. (f) | $ | 26,971,362 | ||
|
896,800
|
CEVA, Inc. (a) | 23,971,464 | |||
|
1,450,000
|
Intel Corporation | 29,261,000 | |||
|
475,000
|
Mindspeed Technology Inc. (a) | 4,018,500 | |||
|
|
|
||||
| 84,222,326 | |||||
|
|
|
||||
| Software and Services 5.8% | |||||
|
1,700,000
|
Convergys Corporation (a) | 24,412,000 | |||
|
1,190,000
|
Xerox Corporation | 12,673,500 | |||
|
|
|
||||
| 37,085,500 | |||||
|
|
|
||||
| Technology Hardware and Equipment 18.4% | |||||
|
780,000
|
Agilent Technologies, Inc. (a) | 34,928,400 | |||
|
801,000
|
Coherent, Inc. (a) | 46,546,110 | |||
|
630,000
|
Flextronics International Ltd. (a) | 4,706,100 | |||
|
62,500
|
Motorola Mobility Holdings, Inc. (a) | 1,525,000 | |||
|
200,000
|
Motorola Solutions, Inc. (a) | 8,938,000 | |||
|
1,190,000
|
RadiSys Corporation (a) | 10,305,400 | |||
|
3,000,000
|
Sonus Networks, Inc. (a) | 11,280,000 | |||
|
|
|
||||
| 118,229,010 | |||||
|
|
|
||||
| Telecommunication Services 2.5% | |||||
|
200,000
|
AT&T Inc. | 6,122,000 | |||
|
145,425
|
Primus Telecommunications Group (a) | 2,121,751 | |||
|
280,000
|
Vodafone Group Plc | 8,050,000 | |||
|
|
|
||||
| 16,293,751 | |||||
|
|
|
||||
| Total Common Stocks (cost $319,410,047) | 636,099,911 | ||||
|
|
|
||||
| PREFERRED STOCKS 0.5% | |||||
| Energy 0.5% | |||||
|
216,823
|
GeoMet, Inc. Series A Convertible Redeemable Preferred Stock (b)(c) | 2,992,157 | |||
|
|
|
||||
| Total Preferred Stocks (cost $2,027,220) | 2,992,157 | ||||
|
|
|
||||
| SHORT-TERM INVESTMENTS 0.7% | |||||
| Money Market Fund 0.7% | |||||
|
4,656,641
|
Fidelity Institutional Money Market Government Portfolio (cost $4,656,641) | 4,656,641 | |||
|
|
|
||||
| Total Investments (cost $326,093,908)(e)(100.3%) | 643,748,709 | ||||
| Cash, receivables and other assets less liabilities (0.3%) |
(2,238,639
|
) | |||
|
|
|
||||
| Net Assets (100%) | $ | 641,510,070 | |||
|
|
|
||||
| (a) | Non-dividend paying. |
| (b) | Affiliate as defined in the Investment Company Act of 1940. |
| (c) | Valued based on Level 2 Inputs – See Note 2. |
| (d) | Valued based on Level 3 Inputs – See Note 2. |
| (e) | Aggregate cost for Federal tax purposes is substantially the same. |
| (f) | A portion of this security is pledged to collateralize open written put option contracts with an aggregate value upon exercise of $475,000. |
See accompanying notes to statement of investments.
CENTRAL SECURITIES CORPORATION
Schedule of Outstanding Written Option Contracts
March 31, 2011
(unaudited)
COLLATERALIZED PUTS
|
Contracts
(100 Shares Each) |
Security
|
Strike |
Expiration
Date |
Premium
Received |
Value
|
|
|
250
|
Intel Corporation
|
$19.00
|
May 2011
|
($15,500)
|
($8,750)
|
CENTRAL SECURITIES CORPORATION
NOTES TO STATEMENT OF INVESTMENTS
1. Security Valuation – Marketable common and preferred stocks are valued at the last or closing sale price or, if unavailable, at the closing bid price. Written options are valued at the last quoted asked price. Investments in money market funds are valued at net asset value per share. Securities for which no ready market exists are valued at estimated fair value by the Board of Directors.
As of March 31, 2011, the tax cost of investments was $326,093,908. Net unrealized appreciation was $317,654,801 consisting of gross unrealized appreciation and gross unrealized depreciation of $346,048,362 and $28,393,561, respectively.
2. Fair Value Measurements – The Corporation’s investments and options written are categorized below in three broad hierarchical levels based on market price observability as follows:
The designated Level for a security is not necessarily an indication of the risk associated with investing in that security.
The Corporation’s investments and options written as of March 31, 2011 are classified as shown below:
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||
| Common stocks | $467,644,911 |
-
|
$168,455,000 | $636,099,911 | ||||
| Preferred stocks | - |
$2,992,157
|
-
|
2,992,157 | ||||
| Short-term investments | 4,656,641 |
-
|
-
|
4,656,641 | ||||
|
|
|
|
|
|||||
| Total investments | $472,301,552 |
$2,992,157
|
$168,455,000 | $643,748,709 | ||||
|
|
|
|
|
|||||
| Options written | ($8,750 | ) |
-
|
-
|
($8,750 | ) | ||
|
|
|
|
|
|||||
There were no significant transfers of investments between Levels 1, 2, or 3 during the three months ended March 31, 2011. There was no change in the value of or purchases or sales of Level 3 investments during the three months ended March 31, 2011. In valuing Level 3 investments, the Corporation considers the results of various valuation methods, which may include comparable company valuation analyses, discounted future cash flow models and recent private transactions. Consideration is also given to corporate governance, marketability, independent appraisals obtained by portfolio companies, company and industry outlooks and general market conditions. 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.
3. Restricted Securities - The Corporation from time to time invests in securities the resale of which is restricted. The Corporation does not have the right to demand registration of the restricted securities. On March 31, 2011, such investments had an aggregate value of $168,455,000, which was equal to 26.3% of the Corporation’s net assets. Investments in restricted securities at March 31, 2011, including acquisition dates and cost, were:
| Company |
Shares
|
Security
|
Date Acquired |
Cost
|
| AeroGroup International, Inc. |
20,000
|
Common Stock |
6/14/05
|
$ 11,719
|
| The Plymouth Rock Company, Inc. |
60,000
|
Class A Common Stock |
12/15/82
|
1,500,000
|
| The Plymouth Rock Company, Inc. |
10,000
|
Class A Common Stock |
6/9/84
|
699,986
|
| Item 2. Controls and Procedures. | ||||
(a) Disclosure Controls and Procedures. The Principal Executive and Financial Officers have concluded that the Registrant’s Disclosure Controls and Procedures are effective based on their evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.
(b) Internal Control Over Financial Reporting. During the last fiscal quarter, there was no significant change in the Registrant’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 3. Exhibits.
(a) Certifications.
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CENTRAL SECURITIES CORPORATION
|
By: |
/s/ Wilmot H. Kidd |
Date: April 29, 2011
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
By: |
/s/ Wilmot H. Kidd |
| Date: April 29, 2011 |
| By: /s/ Lawrence P. Vogel |
| Vice President and Treasurer |
| Date: April 29, 2011 |