Comments on: Ben Graham Net Net Deep Value Stocks

By: Jae Jun

Jae Jun — Wed, 20 Oct 2010 18:34:13 +0000

Hi Ziv,

It depends on the company you look at.
Some burn through cash, some don’t because they stop operations.
The important point is to find out which ones are less likely to burn cash and invest in the ones that have potential to work back to marginal profitability.

By: Ziv

Ziv — Wed, 20 Oct 2010 11:48:52 +0000

Hey Jae!

thanks for this wonderful site.

I checked the screen today and looked at many of the companies – a lot of them are burning through cash. What prevents the company from driving it’s intrinsic value (and the liquidation value) to zero over time?

Do you suffice looking at net nets percentage or do you also look at the fundamentals?

Thanks,
Ziv.

By: Jae Jun

Jae Jun — Mon, 14 Jun 2010 04:35:12 +0000

The price % is the same for both total market share and per share values. If I use total market share, the NNWC is not divided by the shares outstanding. If it is share price %, then NNWC is divided by shares outstanding to keep everything the same.

By: Shane

Shane — Mon, 14 Jun 2010 04:12:22 +0000

NNWC would be measured in Millions or Billions respectively to the assets and liabilities in the equation… so when calculating “P% to NNWC” you’re using Total Market Cap/NNWC correct? Or is it Price per share/NNWC per share)? Is it “total market price of the company% to NNWV” or is it “share price% to NNWV”

By: Jae Jun

Jae Jun — Fri, 28 May 2010 20:32:31 +0000

@ Eric,

I have my own spreadsheets to run each company to check whether is a NNWC. I have the spreadsheet free for download.

I’m still holding VVTV.

By: Eric

Eric — Fri, 28 May 2010 04:20:56 +0000

Great post, How do I personally do my own screen? Is there any screening software out there? Also how long did you end up holding VVTV!

By: Jae Jun

Jae Jun — Fri, 22 Jan 2010 17:40:24 +0000

Made a mistake.
Shareholders equity is net book value while the purpose of NNWC and NCAV is a stricter version of book value. So while you could add retained earnings and paid in capital back into the equation, it would be just be closer to book value.

By: Jae Jun

Jae Jun — Fri, 22 Jan 2010 16:10:43 +0000

@ Troy,

Very interesting thought! Retained earnings and paid in capital is reported under shareholders equity and in the event of a liquidation, I’m sure we would be entitled to some of that. Maybe not all, but at least 50% of shareholders equity should be returned. Meaning, this is a possible inclusion to the net net formula.

Thanks a lot

By: Troy

Troy — Fri, 22 Jan 2010 02:33:31 +0000

Can someone help me with this question?

When we are calculating Net Net Working Capital based on a semi worse case scenario to find an approximate value, why do we not include a fraction of retained earnings and/or paid in capital on the plus side. Theoretically if we are evaluating a company on a hypothetical liquidation situation aren’t the retained earning and paid-in-capital utilized and worth the same as cash?

Net Net Working Capital = Cash and short-term investments + retained earnings + paid-in-capital + (0.75 * accounts receivable) + (0.5 * inventory) – total liabilities

By: Jae Jun

Jae Jun — Wed, 23 Dec 2009 22:41:52 +0000

@ Bob,

Net Net Working Capital = Cash and short-term investments + (0.75 * accounts receivable) + (0.5 * inventory) – total liabilities

By: bob

bob — Tue, 22 Dec 2009 18:49:56 +0000

Question: in your calculation of the liquidating value, are you using Net Net WC – all liabilities?

By: Jae Jun

Jae Jun — Tue, 19 May 2009 09:11:50 +0000

Hi Jeremy,

He did recommend buying as much as possible if it was selling for less than 2/3 of its value. I did buy some but not all.

In the list above, I bought VVTV and I liked ASFI but didn’t buy for some reason. Completely missed out on TUES.

My other net net holdings include LTON, PDII, HRAY, IGOI and SOAP. I’m happy with my current selection and will look to buy more if I can get more cash.

By: Jeremy

Jeremy — Tue, 19 May 2009 09:01:50 +0000

Hi Jae – This is great to see Graham’s net-net formula written out so clearly – didn’t he recommend buying as many companies as possible that were selling at 2/3 or less of their net-net value? Did you end up buying any of these while they were down?

Jeremy’s last blog post..The Forrest Gump Guide to Becoming an Investing Genius

By: Stock Pursuit

Stock Pursuit — Sat, 06 Dec 2008 14:41:35 +0000

yeah, with the shear number of net-nets and that its looking like the financial system isn’t going to end it seems like it is time to bottom hunt. this run with the financial stocks and homebuilders is crazy. Maybe time to load up for the next up leg and sell before the market tanks again in a year or so

Stock Pursuit’s last blog post..Fellow Bloggers & Internet Marketers Will Like This

By: Jae Jun

Jae Jun — Tue, 25 Nov 2008 22:38:02 +0000

Hi Miguel,

Just one of the insert table features in excel

By: Miguel

Miguel — Tue, 25 Nov 2008 21:04:37 +0000

I like your new layout. Great Article. Really like the radar charts. How do you design them… Keep up the great work. (Your on my nighty list again )

By: Jae Jun

Jae Jun — Tue, 25 Nov 2008 17:43:47 +0000

Glad you guys enjoy it.

By: stockmanmarc

stockmanmarc — Tue, 25 Nov 2008 15:44:39 +0000

Good post Jae.

like the new layout

By: Jim

Jim — Tue, 25 Nov 2008 04:47:29 +0000

Excellent posting.