Net-Net is a stock investing technique seeking cheap stocks which are selling at a price lower than their appraised liquidation valuation.
An investor in net-net stocks examines the balance sheet to ascertain a conservative value of its asset value at liquidation, net of all liabilities. If a stock is selling at market capitalization significantly lower (say 30% lower) than a conservative evaluation of the value of assets in liquidation, net of all liabilities, than a purchase is considered. In such cases, both liquidation and improvement of business conditions may drive up the stock price. Nevertheless, profiting from such situations is not guaranteed, as the company losses may accrue and reduce liquidation value below the market value of its stocks.
The screeners below list net-net stock candidates. Unlike the strategies on this website, net-net stocks cannot be bought mechanically, based on a quantitative algorithm alone. These screeners serve as a starting point for investors, who should continue and explore the unique situation of each candidate company and consider qualitative investing aspects as well.
However, these screeners are a HUGE time saver.
We believe we have devised the most sophisticated screeners available free today on the web. The screeners contain:
- The fs_score quality measure, as defined by Carlisle and Grey in “Quantitative Value.”
- NCAV (or Adjusted Net ASsets) % of Market Value, as a measure of cheapness. The higher the figure, the lower the valuation.
- NCAV (or Adjusted Net Assets) value % year-over-year, to determine the rate of asset burn.
Net Current Asset Value (NCAV) Stock Screener
Last update date – see rightmost column
Modified Net Asset Value Stock Screener
Looking for resources on investing in Net-net? Here are a few:
- Security Analysis, Graham and Dodd – the original book teaching the philosophy and practice of Investing in Net-Nets.
- Net Net Hunter – A Subscription service dedicated to investing in Net-nets.
- Ben Graham’s Net Current Asset Values: A Performance Update, an academic papaer by Henry Oppenheimer
- Tobias Carlisle on Net-nets
- Net nets in Old School Value