# Net-Net Working Capital Strategy (Benjamin Graham)
**Moeilijkheid:** advanced · **Timeframe:** 1-3 years · **Asset:** stocks
**Strategie van:** Benjamin Graham
**Risk/Reward:** High individual stock risk, high returns with diversification

## Samenvatting
Koop aandelen onder hun netto huidige activawaarde (NCAV) - Grahams ultieme veiligheidsmarge.

Benjamin Grahams Net-Net strategie is de meest conservatieve waardebeleggsaanpak. NCAV = Vlottende Activa - Totale Verplichtingen. Als een aandeel onder NCAV handelt, koop je het voor minder dan het bedrijf VANDAAG zou kunnen liquideren, alle vaste activa en toekomstige winsten negerend. Graham noemde dit de 'sigaar peuk' benadering - één laatste winstgevende trek.

## Kernprincipes
- Calculate NCAV = Current Assets - Total Liabilities
- Buy only when price < 67% of NCAV (2/3 rule)
- Diversify across 20-30 net-nets to manage risk
- Sell when price reaches NCAV or after 2-3 years

## Instap-regels
- Stock price < 67% of NCAV per share
- Positive current assets
- Company not in bankruptcy proceedings
- Some track record of profitability

## Uitstap-regels
- Price reaches NCAV (100% of liquidation value)
- Hold for 2-3 years even if no price movement
- Company enters bankruptcy or liquidation

## Risico's
- Never invest more than 3-5% per net-net
- Require 20-30 positions for proper diversification
- Expect 30-40% of positions to fail
- Focus on aggregate portfolio returns

## The Cigar Butt Philosophy: One Last Profitable Puff
Benjamin Graham described net-net investing using a memorable metaphor: the cigar butt. Imagine finding a discarded cigar on the street with one puff remaining. It's not a pleasant experience, but that one puff is free—pure profit with zero cost.

Net-net stocks are the market's cigar butts. These are companies so beaten down, so ignored, that they trade for less than their liquidation value. If the company shut down tomorrow and sold all current assets (cash, inventory, receivables) minus ALL liabilities, shareholders would receive MORE than the current stock price.

Why would any company trade below liquidation value? Usually because they're losing money, in dying industries, or facing serious problems. But Graham discovered that buying a basket of these 'cigar butts' produced extraordinary returns—the gains from winners far exceeded the losses from bankruptcies. You don't need the companies to thrive; you just need them to not go completely bust.

## The Net-Net Calculation: Finding Hidden Value
The Net Current Asset Value (NCAV) formula is deliberately conservative. Take current assets (cash, receivables, inventory) and subtract ALL liabilities—both current and long-term. Fixed assets like factories, real estate, and equipment count for nothing.

Why so harsh? Graham knew that in distressed situations, fixed assets often sell for pennies on the dollar. That beautiful factory might fetch 20 cents per dollar in bankruptcy. But cash is cash, receivables can often be collected, and inventory has some value. By ignoring fixed assets entirely, Graham created a floor value that would hold even in worst-case liquidations.

To calculate NCAV per share: (Current Assets - Total Liabilities) ÷ Shares Outstanding. If a stock trades below this number, you're literally buying dollars for less than a dollar. Graham's rule was to only buy when price was 67% or less of NCAV—a built-in 33% margin of safety on top of an already ultra-conservative valuation.

## Why Do Net-Nets Exist? The Psychology of Abandonment
Rational markets shouldn't allow stocks to trade below liquidation value. Yet they consistently do. Why? The answer lies in investor psychology and institutional constraints.

Institutional investors—mutual funds, pension funds, hedge funds—cannot buy most net-nets. These stocks are too small, too illiquid, and too 'ugly' for their mandates. Fund managers risk career damage owning such troubled companies. Analysts don't cover them. Index funds can't own them. The entire professional investing world is designed to avoid exactly these opportunities.

Meanwhile, individual investors flee when companies announce bad news. Price drops create more selling, which creates more price drops. Eventually, stocks become orphaned—no institutions, no analyst coverage, no media attention. That's when prices can fall below even the most conservative intrinsic value. The very features that make net-nets unattractive to professionals create the opportunity for individual investors willing to do the work.

## Walter Schloss: The Master Net-Net Investor
If you want proof that net-net investing works, study Walter Schloss. A Graham disciple who worked alongside Warren Buffett at Graham-Newman, Schloss ran his own fund for 45 years—averaging 15.3% annually versus 10% for the S&P 500.

Schloss's method was remarkably simple. He looked for stocks trading below book value, preferably below net current asset value. He didn't visit companies or talk to management. He just read balance sheets, bought cheap stocks, and held a diversified portfolio of 60-100 positions. When stocks reached fair value, he sold and bought new net-nets.

Schloss worked from a small office with no computer (even in the 1990s), no staff, and almost no expenses. His total research time was about 4 hours per day. Yet he outperformed 99% of professional investors across nearly five decades. The strategy works—but it requires discipline, patience, and the willingness to own truly unloved companies.

Bron: https://daytraders.nl/strategies/net-net-working-capital-strategy-benjamin-graham