The Juicy Aroma Of Craig's Stakes

Even though it's listed on the Big Board, Craig has been practically ignored by the Street. Its shares, now at 15, haven't been active despite the market's infatuation with small stocks. But in recent weeks, this holding company has caught the fancy of some smart-money investors who are attracted mainly by assets that they believe are greatly undervalued.

Here's why: Craig owns 50% of Stater Bros. Holdings, a fast-growing, privately held, 104-supermarket chain in Southern California. The stores, all located close to shopping centers in such cities as Los Angeles and San Bernardino, generate sales of about $1.5 billion a year. One New York money manager estimates Stater's value at $30 per Craig share, based on seven times Stater's operating cash flow.

Craig also owns a controlling interest in Reading Co., which owns and manages several valuable commercial properties in Philadelphia. The company has cash on hand of $60 million and a tax-loss carryforward worth $163 million. Several asset-value players own big stakes in Reading, among them Mike Price, who runs Mutual Shares Fund. Craig's stake in Reading, which trades over-the-counter at $11 a share, is estimated by some analysts to be worth $4 per Craig share.

Craig also has a stake in Citadel Holding, whose principal subsidiary is Fidelity Federal Bank in Glendale, Calif. Craig's stake in Citadel, which trades on the American Stock Exchange at 30, is estimated to be worth $2 per Craig share.

These numbers add up to a total value of $36 a share for Craig before subtracting debt of around $6 a share. Says one big Craig investor: "Patience will pay off, because the values in Craig will have to be recognized one of these days."

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