Graham laid out basic tenants to help investors make smart investment decisions. As Graham said:
An investment operation is one in which, after thorough analysis, promises safety of principle and an adequate return. Activities that do not meet these requirements are speculative.
One of Graham's favourite strategies was what he dubbed "cigar butt stocks," or net net stocks. Graham found this strategy so lucrative that he eventually renounced all other strategies to focus on net nets exclusively.
“At this point let me consider briefly an approach with which we were closely identified when managing the Graham-Newman fund. This was the purchase of shares at less than their working capital value. That gave such good results for us over a forty-year period of decision making that we eventually renounced all other common-stock choices based on the regular common stock procedures, and concentrated on these ‘sub-asset stocks.’ ” - Benjamin Graham [The Decade 1965-1974 (https://www8.gsb.columbia.edu/sites/valueinvesting/files/files/DOC003.pdf); Its Significance For Financial Analysts, Benjamin Graham, 1975.]
The strategy has been so successful and recommended by so many great investors that we've decided to focus on the strategy exclusively at Net Net Hunter (http://www.netnethunter.com) for our own investing. In the process, we've collected as much information on the strategy as possible -- a difficult feat considering that it's mostly scattered in bits and pieces in dozens of books and soundbites. Stop by to learn about the the strategy, and sign up for our free newsletter to dive deeper down the rabbit hole.