NCAV companies

**dchamber** Tue Feb 14, 2006 1:25 pm

NCAV companies
I've just read Graham's 'Intelligent Investor' and the idea of buying companies selling for less than 66% of Net Current Assets seems like a good idea. He stresses that not every stock will be a winner and it is important to diversify. I agree but I can’t find many stocks that meet this criteria. With so few stocks how can you diversify?

So far I’ve found 3 companies that meet the criteria – TAIT, REMC, and DHOM.
These do not look like great a company which probably explains how they got in this condition. Both TAIT and REMC have negative earnings each year and DHOM has positive earning but their P/E is 15.5 while its industry is only 8.8.

Of course they all have a good current ratio so guess they will not be going bankrupt anytime soon.

DHOM and TAIT have most of their current assets in inventory. REMC has a lot in cash.

Below is the NCAV value per share for each stock followed by the last price and its percentage of NCAV.

TAIT $3.40 $2.24 66%
REMC $4.18 $1.30 31%
DHOM $23.71 $10.10 43%

I got the impression Graham bought companies if he could get them a 2/3 of NCAV with really no other analysis. Is this correct?

How can you diversify if so few stocks are available?

Can anyone recommend a screener that can help find these stocks? I have not seen a screener that lets you search on the balance sheet items and compare perform math on the numbers.

Take a look at the stocks above. Do you think I calculated the numbers correctly?

**blast_investor** Tue Feb 14, 2006 1:37 pm

No, I do not believe with just a few NCAV net net picks, you can diversify.

Nowadays, the NCAV picks as described in Ben Graham's book almost disappeared as a group.

In Ben Graham's time, there were hundreds of NCAV net net picks there and lots of those picks were profitable and very sound. The overall valuation nowadays are much higher now.

**blast_investor** Tue Feb 14, 2006 1:40 pm

Re: NCAV companies
That is correct statement. Graham used diversification plus
NCAV screener, that is all. He did not even want to study business.

The recent Joel Greenblatt's magic formula is similar fashion, just a screener, no business analysis.

dchamber wrote: I got the impression Graham bought companies if he could get them a 2/3 of NCAV with really no other analysis. Is this correct?

**teenvestor2** Tue Feb 14, 2006 9:26 pm

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