| 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.
