Deep Value — Graham-Style Net-Nets

Graham's most aggressive idea was also his most mathematically rigorous: buy a business for less than the value of its cash and receivables alone, ignoring every other asset entirely. This is net-net investing — and it still works when applied correctly.

Why This Matters

A net-net stock is one trading below its net current asset value (NCAV): current assets minus all liabilities (current and long-term), divided by shares outstanding. If a company has ₹100 crore in current assets (cash, receivables, inventory), ₹60 crore in total liabilities, its NCAV is ₹40 crore. If the market capitalisation is ₹25 crore — 63 paise for every rupee of net current assets — you are getting the long-term assets (property, equipment, brand) for free. Graham found that buying diversified baskets of such companies produced reliable returns even when individual businesses deteriorated, because the liquidation value provided a floor.