July 29, 2014 Issue of Ben Graham Net-Net Bargains Newsletter Is Ready

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Benjamin Graham Net-Net Working Capital Screener


What are Benjamin Graham's Net Current Asset Value Bargains?

In The Intelligent Investor, Benjamin Graham discussed the methods he used in his investment firm Graham_Newman. One is them is what he called Net-Current-Asset (Or “Bargain”) issues. He wrote:

The idea here was to acquire as many issues as possible at a cost for each of less than their book value in terms of net-current-assets alone – i.e., giving no value to the plant account and other assets. Our purchases were made typically at two-thirds or less of such stripped-down asset value. In most years we carried a wide diversification here – at least 100 different issues.

Graham’s “net current asset value” approach, apparently works very well. One research study, covering the years 1970 through 1983 showed that portfolios picked at the beginning of each year, and held for one year, returned 29.4 percent, on average, over the 13-year period, compared to 11.5 percent for the S&P 500 Index. Other studies of Graham’s strategy produced similar results.

Ben Graham loved these types of situations, defining the Net Current Asset Value (NCAV) or Liquation value as:

Net Current Asset Value (NCAV) = Current Assets - total liabilities

and Net Cash as

Net Cash = Cash and short-term investments - total liabilities

Ben Graham loved these types of situations, defining the net-net working capital (NNWC) value as:

Net-Net Working Capital (NNWC) = Cash and short-term investments + (0.75 * accounts receivable) + (0.5 * inventory) - total liabilities

Graham looked for companies whose market values were less than two-thirds of that net-net value.

With this in mind, GuruFocus has created a Graham Net-Net Working Capital screener to filter out the companies that meets the net-net value criteria. The rules are:

  • The stock prices are less than the net current asset value of the companies – Benjamin Graham. The companies with Price/NNWC between 100% to 300% are also displayed for you to get more investment ideas.
  • During the past 12 months, the companies generated positive operating cashflow. The ones with negative operating cashflow is also displayed.
  • The company has no meaningful debt compared to its cash position.
  • According to Benjamin Graham, some of these companies may well go under as economic conditions worsen, it is important to hold a diversified group of them.

The performance of the stocks can be seen in user portfolios, described in this article



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Symbol Company Price Net Current Asset Value (NCAV) Price/NCAV (%) Net-Net Working Captial (NNWC) Price/NNWC (%) Oprt. Cash Flow per share(12m) ($) Market Cap ($mil)
Premium Member OnlyPremium Member Only3.73$3.2486.90.00105.187
Premium Member OnlyPremium Member Only4.13$8.88215-0.60157.264
Premium Member OnlyPremium Member Only6.11$16.78274.6-0.40690.951
Premium Member OnlyPremium Member Only3.21$8.95278.8-0.20319.000
Premium Member OnlyPremium Member Only8.28$14.54175.62.10243.669
Premium Member OnlyPremium Member Only0.96$1.23128.10.0014.672
Premium Member OnlyPremium Member Only9.82$28.20287.22.50658.655
Premium Member OnlyPremium Member Only0.77$0.3545.50.0025.102
Premium Member OnlyPremium Member Only2.43$3.11128-0.7015.223
Premium Member OnlyPremium Member Only2.56$5.40210.9-1.3073.638
Premium Member OnlyPremium Member Only0.21$0.31147.60.001.752
Premium Member OnlyPremium Member Only0.53$0.5298.1-0.1044.287
Premium Member OnlyPremium Member Only3.08$7.23234.7-1.5077.325
Premium Member OnlyPremium Member Only0.86$1.15133.7-0.4024.162
Premium Member OnlyPremium Member Only1.09$1.90174.3-0.10328.844
Premium Member OnlyPremium Member Only4.28$8.94208.9-18.7077.671
Premium Member OnlyPremium Member Only4.81$5.35111.20.6030.351
Premium Member OnlyPremium Member Only4.78$13.49282.20.00104.147
Premium Member OnlyPremium Member Only0.52$1.02196.2-0.4025.131
Premium Member OnlyPremium Member Only5.36$6.52121.6-0.10148.059
Premium Member OnlyPremium Member Only1.71$1.90111.10.8036.820
Premium Member OnlyPremium Member Only5.36$12.39231.2-0.202082.577
Premium Member OnlyPremium Member Only1.68$3.70220.20.1084.371
Premium Member OnlyPremium Member Only1.67$2.17129.90.2070.882
Premium Member OnlyPremium Member Only1.46$3.38231.50.20199.056
Premium Member OnlyPremium Member Only1.59$4.072560.1057.718
Premium Member OnlyPremium Member Only23.13$68.31295.39.10562.292
Premium Member OnlyPremium Member Only0.96$1.39144.8-0.9031.541
Premium Member OnlyPremium Member Only0.94$2.08221.3-0.1025.017
Premium Member OnlyPremium Member Only0.76$1.37180.3-0.4046.738

Add Notes, Comments

If you want to ask a question, or report a bug, please create a support ticket.

User Comments

Amt2100
ReplyAmt2100 - 3 months ago
The Add or remove tickers list only shows the first page of tickers. It should have the entire list of results.
Second problem, the Export function gives erroneous tickers that aren't even on the list. Not a couple, most of them.
Libertadpp
ReplyLibertadpp - 9 months ago
The Ben Graham Net-Net Bargains Newsletter is using Tangible Book, NOT NCAV, there is a big difference. Some stocks are not possible to trade, or they doesn't give information to the SEC.
Asalguero
ReplyAsalguero - 1 year ago
Why when i export to excel, the excel file is different that i see in the screen???

Please help!
Richday101
ReplyRichday101 - 1 year ago
May 21/2013 - Benjamin Graham Net Current Asset Value Screener
Commodity
ReplyCommodity - 5 years ago
Go to Stingey Investor.com

Simple Graham - pe of 15 or less - debt to equity of 50% or less.
Liarspoker
ReplyLiarspoker - 5 years ago
Crickey - that's one mother of a formula !!

I have a list of net net stocks gathered by the formula ( Current Assets - All Liabilities ) - 30% not really taking account for each current asset entry.

I am reworking my list using the new formula and most stocks are falling short !! Lucky I am only researching atm.

Where is that formula from btw ? Security analysis ?

Many thanks for the food for thought. :O)


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