D,
Good observations. I did indeed set the minimum market cap at $2.5 million. I changed the web site to reflect that error.
I used
1) Market Cap < (NWK * 2/3), where NWK is CA-CL
2) Total Debt/Equity <50
This gave me an exportable list of 99 names and values that I could put in Excel and work with. Then I manually entered restricted cash, long-term debts, long-term liabilities, and minority interest, and subtracted all that from the NWK value to give a new column, net net value. Given that I was going to have to manually check the market caps and share amounts anyway, I figured this was feasible. Doing it your way - figuring out the LT debt variable with a user-defined formula - is a good short cut, and in fact Graham's formula really just uses LTD. I take it a step further. So your net is bigger, and hence you catch more fish.
A lot of the valuations changed in a big way when I looked at the true liabilities and true market caps. I eliminated several that were not currently reporting, or had unreliable data. Nearly 30 turned out to have MK/NN ratios greater than 1.
I would not be surprised if your method turned out to be the best quickie way to find net nets on the net. The extra time spent screening your extra fish may be less than my extra research time.
Good investing,
Mike |
