July’s pick’s legacy business is letting contracts expire and their business runoff. Management is an activist deep value investor and has used the company in the past as a platform for activism. The company currently has a small holding in another near net-net.
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The Ben Graham: Net-Net Newsletter’s July pick is a intellectual property licensing firm with an activist investor as CEO.
· The company is selling for 81% of NCAV.
· The Chairman of the Board and CEO is an experienced activist deep-value investor.
· The company earned $.53 per share last year; the market is giving their earnings no credit.
· The company is undertaking a transformation from an intellectual property licensing company to an asset management firm. They have had past success at activist value investing.
“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.