The Ben Graham: Net-Net Newsletter’s June’s picks was first profiled two years ago. Recent events have made the company much more attractive, especially after the company engaged an investment bank to explore a sale, or asset divesture.
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This month’s pick:
· NCAV of $5.98 per share against a last trade of $4.58.
· While reporting headline losses, the company generated operating cash flow.
· The company has hired an investment bank to explore strategic alternatives, including the sale of a division, or the sale of the entire company.
· The CEO stated on the latest conference call that he believes they could liquidate receivables and their real estate at book value if they needed to.
· Poor results and a court judgment from a subsidiary are masking the company’s turnaround progress.
“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.