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Dutton Associates updates its coverage of Elron Electronic Industries (Nasdaq:ELRN) maintaining a Strong Buy rating and a price target of $15.00. The 9-page report by Dutton senior analyst Barry Raeburn is available at www.jmdutton.com as well as from First Call, Bloomberg, Zacks, Reuters, Knobias, and other leading financial portals. Elron reported a net loss of $4.4 million, or $0.15 per share, for the third quarter of 2006. Elron’s net loss in the third quarter of 2006 resulted from Elron’s share in the net losses of its group companies. This is the normal expectation as Elron is largely an investment holding company, with the majority of the portfolio company investments accounted for under the equity method. The company’s primary source of income comes from gains on the sale of portfolio companies. At the current market value, we believe investors are getting almost a free call option on Elron’s private company portfolio. A bottoms-up view of Elron’s NAV shows the private companies are contributing very little value, enhancing an already significant discount. We will illustrate this point in the table at the end of our report. Given our general inability to time portfolio investments and dispositions, we believe that NAV is a better way to track Elron’s progress than earnings forecasts and the prototypical valuation measures. The Company’s stock currently trades at discount to its NAV. We encourage investors to review our detailed, updated, initial report from October 2006 for greater detail about the group structure. About Dutton Associates Dutton Associates is one of the largest independent investment research firms in the U.S. Its 31 senior analysts are primarily CFAs and have expertise in many industries. Dutton Associates provides continuing analyst coverage of over 140 enrolled companies, and its research, estimates, and ratings are carried in all the major databases serving institutions and online investors. The cost of enrollment in our one-year continuing research program is US $39,500 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. The Firm does not accept any equity compensation. We received $63,000 from the Company for 8 quarterly Research Reports with coverage commencing on 9/08/2005. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by us is in any way related to the specific ratings or views contained in this research report or note.
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