TimbaBear: net-nets I am just guessing, but I would presume many people here would consider a definition by Jim Clarke to be most appropriate. (Or maybe RJM, who seems to specialize in such investments). But since I'm here and I've got some time, I refer you to the standard "Intelligent Investor", Chapter 15 (1973 edit), "Stock Selection for the Enterprising Investor", referring to net current asset stocks (NCA): "It always seemed, and still seems, ridiculously simple to say that if one can acquire a diversified group of common stocks at a price less than the applicable net current assets alone- after deducting all prior claims, and count as zero the fixed and other assets- the results should be quite satisfactory."
We are talking about stocks selling at price equivalent to working capital/sh. A NCA stock = a netnet.
To me, a "Ben Graham net-net" is a stock selling at 2/3 of NCA. Dr. Graham suggested that buying a diverse number of stocks each of which sold for 2/3 of NCA and holding each (Patience is required!) until the stock price rose to NCA value (or until two years elapsed) and then selling-- that that was a method that proved profitable. There are also some notes that I have wherein Dr. Graham said just buy the NCA stocks and that works out well. On this thread, IMO - and I am guessing only - the strong preference is for 2/3 NCA for a purchase.
Paul |
