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July Ben Graham Net-Net Newsletter: A Stock Trading at 2/3 NCAV with a Potential Catalyst

July 07, 2012

The Ben Graham: Net-Net Newsletter’s July’s pick is a company trading below 2/3 NCAV with a potential catalyst for full book value, which is 2.5x more than the current price to be realized. The company has been consistently profitable and operates in a stable industry. Cash makes up 70% of the company’s market capitalization. This is a conservatively run business in a sleepy industry ripe for a takeover.

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This month’s pick:

The Ben Graham: Net-Net Newsletter’s July pick is a profitable boring business with a Board of Directors looking to maximize shareholder value.

This month’s pick:

1. Is consistently profitable·

2. Yields a generous 3.2%

3. Cash makes up 70% of the company’s market capitalization, with no debt on the balance sheet.


If the above points aren’t attractive enough what really makes this stock special is a catalyst exists that could help shareholders realize book value for this company.

1. There is a director and major shareholders who have agitated for the company to be sold at or above book value in the past.

2. The major hurdle to a sale has been removed.

3.
While shareholders wait for something to happen they can be reassured by the large margin of safety and the consistent dividend.

Download your copy of the Ben Graham: Net-Net Newsletter today

“It always seemed, and still seems, ridiculously simple to say that if one can acquire a diversified group of stocks at a price less than the applicable net current assets alone...the results should be quite satisfactory. They were so, in our experience, for more than 30 years.”- Ben Graham

What’s a Net-Net?

A net current asset value bargain—or net-net—is a stock selling for less than the value of its current assets—cash, receivables, and inventory—minus all liabilities. Basically, it’s a stock selling for less than its liquidation value.

What’s the Ben Graham: Net-Net Newsletter?

GuruFocus’s Ben Graham: Net-Net Newsletter is written by Nate Tobik. It picks one new net-net every month. The newsletter goes out to subscribers on the first Friday of the month. The newsletter looks for stocks that have both a tangible margin of safety and reasonable upside potential.

So, get your copy of the Ben Graham: Net-Net Newsletter today.


Rating: 2.6/5 (7 votes)

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