Revisiting Benjamin Graham's "Net-Net" Stocks

What kind of investment opportunities do net net stocks present these days anyways?

The Visit of the Queen of Sheba to King Solomon, Edward Poynter, 1890, oil on canvas (Art Gallery of New South Wales)

Not all great financial minds will see their work endure. As much as I think Benjamin Graham’s works contain timeless lessons in investing mindset and fundamental security analysis, plenty of people think his ideas should go the way of the dodo. Even Graham’s most famous disciple admits that much of his success came after he eschewed Graham’s ultra-conservative underwriting criteria.

Adhering to Graham’s principles for investment underwriting feels like dumpster diving, and it’s an acquired taste. These “cigar butt” investments are all about extracting the last bit of value of an asset that the market has already cast aside.

Part of me wonders if this investing style has any merit anymore. I’ve found a decent investment or two putting on my Benjamin Graham cap, such as my investment in Saker Aviation Services (OTC: SKAS), a nano cap I bought when the stock traded for less than the cash on the books and assigned zero value to its assets. So you could say I’m a little biased.

I’ve wondered if Benjamin Graham’s net-net stocks are even out there any more and ran a screen to see what kind of companies come up. The short answer is that they still exist, but the list of potential investment worthy stocks on that list is short.

Let’s take a look at this stock screen again and see what we can dig up

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