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Stingy Investor Tip Sheet
|Graham Net Net November 2015 Update|
I've refreshed the list of Canadian and U.S. Net Net stocks. These
are stocks trading at a discount to current assets less all
liabilities. Ben Graham originally suggested stocks trading at 66% of
their Net Net value. I was more generous and started my search at
100% or less of Net Net.
You'll remember that a stock's Net Net is equal to its current
assets less all liabilities.
It should come as no surprise that there are relatively few Net Net
candidates and they tend to be very small stocks indeed. Data on
these very small stocks tends to be uneven at best. Indeed, looking
for Net Nets can be a good way to uncover database errors or bankrupt
companies. Nonetheless, you can occasionally spot a gem or two.
But, before diving in, make sure you go the extra mile to check the
data and beware that many of these stocks are extraordinarily
illiquid. In such cases, market orders can lead to poverty. Buying
stocks indiscriminately from a Net Net list can be dangerous.
If it's dangerous, why bother? Because the returns have been quite
good as Montier showed in his article "Graham's net-nets: outdated or
outstanding?" which can be found in his book "Value Investing".
(Hint: The answer is outstanding.) You just have to sort through the
The two tables below present raw data. To help discriminate between
the bankrupt companies and those that are not quite dead yet, the
tables are sorted by market capitalization from high to low. It's not
perfect but broken companies usually appear lower down on each list.
Also, for NASDAQ stocks, a trailing Q in the 5 letter ticker symbol is
a bad sign.
To clear out some of the tiny stock clutter, I dropped stocks with Net Net
values or market capitalizations of less than $1 million. Stocks with
prices below $0.05 per share were also removed.
Here are the lists of Canadian and U.S. stocks that pass the Net Net
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|11/14/2015 3:03 PM EST Permlink save & share||Value Investing|