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December Ben Graham Net-Net Newsletter: An activist value fund has taken an interest in this critical industry player

December 08, 2012

The Ben Graham: Net-Net Newsletter’s December’s pick is a critical player in the HDD industry. The company is based out of England but trades on the NASDAQ as an ADR. The market has ignored the company, but two value funds have spotted it and accumulated a 25.5% stake. With a P/E of 6.2x and a P/B of .68x it’s not hard to see the value. At a minimum this company is worth NCAV, which is 11% higher than the last trade.

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The Ben Graham: Net-Net Newsletter’s December pick is a global OEM hard drive manufacturer.

This month’s pick:

· Trades at an 11% discount to NCAV, and a 32% discount to book value.

· The company is debt free.

· They return capital to shareholders in the form of a dividend; the stock currently yields 3.1%.

· Has been spotted by the activist value hedge fund Baker Street Capital who accumulated a 19% position.

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.

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