Graham and Dodd Net Net Plus strategy

When he was running his investment partnership, Benjamin Graham’s bread and butter strategy was buying companies below their liquidation value. Compared to book value, the liquidation value is a more rigorous standard. It excludes many items such intangibles and properties/equipment that are difficult to ascertain value.

Our Quantitative Graham Dodd’s Net Net Plus Strategy is an improved version of the time tested buying below liquidation value strategy. It looks for stocks that are selling close to their liquidation value because, in today’s market, there are currently no stocks selling below liquidation values. It looks for additional safety by avoiding stocks with low quality assets and stocks with potential to be fraud.

The strategy has impressive back tested results over the last 14 years (1/1/1999-7/12/2013) – our 10 stocks Graham and Dodd’s Net Net Plus strategy has a 32.0% annual total return versus 2.2% for the S&P 500. The exceptional outperformance comes from the effectiveness of the strategy’s stock selection and our value added risk management overlay. The risk management overlay avoids stocks with less than $100 million market cap, enforces a 25% entry based stop loss rule, and it utilizes macroeconomic and market risk indicators to signal when we should take less risk.

Models represent hypothetical or simulated performance, not actual trading. Since the trades have not actually been executed, the results may have under-or-over compensated for the impact of certain market factors, such as liquidity. Our simulated returns include dividends, commission and slippage for each trade. Remember that past returns are no guarantee of future returns.
Models represent hypothetical or simulated performance, not actual trading. Since the trades have not actually been executed, the results may have under-or-over compensated for the impact of certain market factors, such as liquidity. Our simulated returns include dividends, commission and slippage for each trade. Remember that past returns are no guarantee of future returns.

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We offer a variety of income and quantitative strategies which we can combine to meet your financial need. Please contact us to receive more information on our investment strategies.