Singaporean Net-Nets listed on the SGX as of 2016

(04-01-2016, 03:54 PM)CityFarmer Wrote:

(04-01-2016, 03:39 PM)opmi Wrote: ^^ net-nets are net-nets for some reasons. Just like a pretty girl, who wont be available too long for guys to chase.

when playing net-nets, must at least know specifically why it is undervalued.

Pure quantitative mean of net-nets investing, needs broad diversification, to work. Both our mentors, The late Graham, and Schloss were having about 100 stocks with the approach.

Wuz under the impression in Intelligent Investor book, Benjamin Graham recommended 10 to 30 stocks.

100 stock portfolio with outsized bets on specific stocks not >20% of entire portfolio was Walter Schloss's strategy.

Great sticky list. I wonder could this be updated throughout the year.

(05-01-2016, 06:54 AM)BlueKelah Wrote:

(04-01-2016, 03:54 PM)CityFarmer Wrote:

(04-01-2016, 03:39 PM)opmi Wrote: ^^ net-nets are net-nets for some reasons. Just like a pretty girl, who wont be available too long for guys to chase.

when playing net-nets, must at least know specifically why it is undervalued.

Pure quantitative mean of net-nets investing, needs broad diversification, to work. Both our mentors, The late Graham, and Schloss were having about 100 stocks with the approach.

Wuz under the impression in Intelligent Investor book, Benjamin Graham recommended 10 to 30 stocks.

100 stock portfolio with outsized bets on specific stocks not >20% of entire portfolio was Walter Schloss's strategy.

In the book, Benjamin Graham suggested rules on different type of investor. The rule, is among the four rules targeted on defensive investors. Quantitative, or statistical approach, is one of the approaches written in the book. The book has clearly stated, that he is committed to quantitative approach (page 145).

(a keen reader of the book, who has read the book cover-to-cover many times)

(05-01-2016, 10:35 AM)CityFarmer Wrote:

(05-01-2016, 06:54 AM)BlueKelah Wrote:

(04-01-2016, 03:54 PM)CityFarmer Wrote:

(04-01-2016, 03:39 PM)opmi Wrote: ^^ net-nets are net-nets for some reasons. Just like a pretty girl, who wont be available too long for guys to chase.

when playing net-nets, must at least know specifically why it is undervalued.

Pure quantitative mean of net-nets investing, needs broad diversification, to work. Both our mentors, The late Graham, and Schloss were having about 100 stocks with the approach.

Wuz under the impression in Intelligent Investor book, Benjamin Graham recommended 10 to 30 stocks.

100 stock portfolio with outsized bets on specific stocks not >20% of entire portfolio was Walter Schloss's strategy.

In the book, Benjamin Graham suggested rules on different type of investor. The rule, is among the four rules targeted on defensive investors. Quantitative, or statistical approach, is one of the approaches written in the book. The book has clearly stated, that he is committed to quantitative approach (page 145).

(a keen reader of the book, who has read the book cover-to-cover many times)

I borrow most of my reading material but BG's classic is one for keeping on the bookshelf. It's about time I re-read this classic

Nonetheless, whether 10 or 100 stocks for diversification, I feel that the playing field for net-nets during BG's time and our times, is very much different. I'm closer towards OPMI's stand where one needs to spend a lot of time understanding the reason/s for each net-nets. This understanding needs to be '2nd level kind of thinking' for most retail investors, since we are not insiders. This understanding also needs to be supplemented by whether such net-nets will have any catalyst, or they will just de-generate into value traps (this is along the lines of specuvestor's thinking)

I have read somewhere that pure statistical approach these days may only be profitable (or beat the benchmark index) for Japan net-nets, else-wise, this approach is not better off than an indexing one.

(06-01-2016, 04:22 PM)weijian Wrote: I have read somewhere that pure statistical approach these days may only be profitable (or beat the benchmark index) for Japan net-nets, else-wise, this approach is not better off than an indexing one.

I am very interested to know the source of the reading. Any clue(s) for my search?

Trapped in Net/Nets

The danger of even net/net, “cheap” stocks or camouflaged value traps.

Barron’s Sept. 19, 2011.

James Grant: I invested in Japanese value stocks, and had occasions to regret over and over on the reluctance of the Japanese to admit error and re-price. Companies that deserved bankruptcy would often not be allowed to meet their just deserts, but were carried on the back of banks that themselves had no true claim to solvency but were supported by the government. Capitalism is not just about success–that is the easy part. It is also about failure, recognizing it, dealing with it, liquidating it, properly pricing it. The Japanese have been unable to do that, and this characteristic was on display in the 1920s as well, so I take this to be a salient Japanese trait.

You were a great believer in Japanese equities. What happened?

With my friend Alex Porter, I was a general partner in Nippon Partners from 1998 through the end of 2010. We invested in Japanese value stocks. We closed it in December of 2010, because we weren’t making money, and it was immensely frustrating. Japanese corporate managers, by and large, don’t own equity. They have a platonic interest in the stock price. In the absence of a lively market for corporate control, there is no check on management doing nothing. In 1998 we began investing in companies whose shares are trading well below their pro-rata share of net cash on the balance sheets. In this country, in 1974, 1975, there were a lot of companies like that they did rather well in the 1970s and the 1980s. But in Japan, many (companies like these) remained at these compelling valuations for year upon year upon year. You get tired. The last straw was when one of our companies was selling at a huge discount to everything, and announced that it would undertake a capital investment larger than its stock-market capitalization.

(06-01-2016, 04:22 PM)weijian Wrote: I have read somewhere that pure statistical approach these days may only be profitable (or beat the benchmark index) for Japan net-nets, else-wise, this approach is not better off than an indexing one.

I would also like to know the source of this.

Anyway, I want to share probably my favourite research paper on net-net investing. I think this paper was done in response to all those who say Ben Graham's net net investing is outdated in today's era.

Ben Graham's Net Nets: Seventy-Five Years Old and Outperforming (2010)

http://csinvesting.org/wp-content/upload...rming1.pdf

Also, thank you CityFarmer for making this thread a sticky.

(06-01-2016, 08:56 PM)beau Wrote:

(06-01-2016, 04:22 PM)weijian Wrote: I have read somewhere that pure statistical approach these days may only be profitable (or beat the benchmark index) for Japan net-nets, else-wise, this approach is not better off than an indexing one.

I would also like to know the source of this.

Anyway, I want to share probably my favourite research paper on net-net investing. I think this paper was done in response to all those who say Ben Graham's net net investing is outdated in today's era.

Ben Graham's Net Nets: Seventy-Five Years Old and Outperforming (2010)

http://csinvesting.org/wp-content/upload...rming1.pdf

hi CF and beau,
I tried googling again to recall the sources. It comes from James Montier's study in 2008 (I may have read his book 'Value Investing' ~1-1.5years back, which might also talked about it but I got no chance to verify it again as I have since returned the book to NLB though)

here is the link: http://www.netnethunter.com/japanese-net...r-foolish/ with the extract below:

In 2008, James Montier came out with a research paper titled, “Net-Nets: Outdated or Outstanding?”. In it, he surveyed the investment situation relative to Graham’s net nets on a global basis. What he found was that, of the 175 NCAV stocks available globally in 2008, over half were located in Japan. Following that lead, he took a look at what would happen if an investor put together a portfolio of Japanese net net stocks from 1985 to 2007.
As it turned out, the result of investing in Japanese net nets from 1985 to 2007 was fantastic. While the Japanese stocks as a whole provided investors with a compound annual growth rate of just 5%, Japanese net nets decimated the index with an excess return over the market of 15% per year, coming in at a CAGR of 20% for the period. Not bad!
By comparison, while US net nets performed better overall, they also benefited from a fantastic tailwind. Yet, despite the great investing environment from 1985 to 2007, American net current asset value stocks merely doubled the market return, while Japanese NCAV stocks beat the Japanese index by 200%!

After re-reading this, I do stand corrected on my previous statement that 'only Japanese net-nets if profitable/outperform the index'. The correct statement would be 'net-nets does outperform in the different geographies but in terms of beating its home index, Jap net-nets come out ahead'

(06-01-2016, 08:56 PM)beau Wrote:

(06-01-2016, 04:22 PM)weijian Wrote: I have read somewhere that pure statistical approach these days may only be profitable (or beat the benchmark index) for Japan net-nets, else-wise, this approach is not better off than an indexing one.

I would also like to know the source of this.

Anyway, I want to share probably my favourite research paper on net-net investing. I think this paper was done in response to all those who say Ben Graham's net net investing is outdated in today's era.

Ben Graham's Net Nets: Seventy-Five Years Old and Outperforming (2010)

http://csinvesting.org/wp-content/upload...rming1.pdf

I have a similar view, of course, pending for further reality tests.

Late Mr. Walter J. Schloss, with his net-nets approach, had worked in US market till his death, just few years ago, hadn't he?