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GKN passes   / 3 of the Benjamin Graham Net Nets Screen Strategy.
History This strategy is one of Ben Graham's most famous bargain stock strategies aiming to find stocks trading for less than their liquidation value.  The idea is to find stocks  trading at such a cheap price that you could buy the whole company and sell off all the assets at a profit with near minimal risk.    It is a simplistic screen which just looks for stocks where the market cap is less than the so called 'Net Net Working Capital'  (defined as  Cash and short-term investments + (75% of accounts receivable) + (50% of inventory) - All Liabilities).  The formula is very conservative in estimating the value of inventory and receivables due to the likelihood that not all will be collectible in a firesale. About such stocks Graham wrote: ‘ No proprietor or majority holder would think of selling what he owned at so ridiculously low a figure…In various ways practically all these bargain issues turned out to be profitable and the average annual result proved much more remunerative than most other investments’. This is not a strategy for the faint-hearted due to the high risk companies that qualify. Graham sought safety from individual bankruptcy risk by diversifying his portfolio with a large numbers of companies – he suggested 30. more »

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P/NNWC < 1
3m Avg Vol > 0.25
Sector not in F inancials,
Qualifies in the top 200 stocks sorted by P/NNWC ascending

Click Here to view all the stocks qualifying under this Strategy.

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