Is Net Net Hunter Worth It?

So you like net nets and you came across Net Net Hunter, but now you are left with a burning question: Is Net Net Hunter worth it or not?

The last thing we want is for someone to join only to be dissatisfied with being a member, so it’s important for you to know exactly what we do and how it could benefit you. We are far from just an international net net stock screener. We’re a community that aims to make your net net investing substantially easier.

So, whether Net Net Hunter is worth it or not will really depend on how valuable you think our package would be for your own investing. Let’s get to that now…

Is Net Net Hunter Worth It? Our Value Proposition

What’s Net Net Hunter’s value proposition? Quite simply… 

Net Net Hunter radically reduces the time and effort that it takes you to put together a high quality net net portfolio. 

That’s the whole reason we exist - to make it substantially easier for members to find high quality net nets to fill their portfolio.

Time these days is in short supply, whether you’re working a demanding job, have significant family obligations, are trying to get through university, or simply want to have a life outside of screening for, and researching net nets. If one of these describes you, then you know how hard it can be to select 20 to 30 decent net nets and keep your portfolio fully stocked on a monthly basis.

Quite simply, if you insist on simply accessing a bulk screener to pick net nets to research to execute Graham’s strategy, you need to have a significant amount of free time to spend on the project or you simply will not be able to stick it out long term. 

The Basic Net Net Hunter Package

How does Net Net Hunter help? Three ways:

  1. Shortlist - We filter through roughly 1000 international net nets by hand each month to provide a shortlist of 40-50 picks for you to research. You don’t have to comb through a list of 100s of stocks to find something suitable to research - we’ve done this for you.
  2. Ansan 2.0 Net Net Strategy - This is a simple mechanical approach that I crafted for a close friend of mine. It provides followers with simple buy and sell rules and focuses on net nets with characteristics that have been shown to outperform net nets as a whole in academic studies. This is by far the easiest way to get started and maintain the strategy.
  3. Investment Analysis - We provide members with at least 1 investment analysis per month that fits our Ansan mechanical strategy. Members use this as an additional insight we have into the particular stock. Evan and other members also share other analyses on our forum when we find something particularly interesting. These analyses typically include more qualitative elements that make for a compelling net net investment.
  4. Net Net Hunter Community Forum - Our community has dozens of high calibre cigar butt investors who share thoughts on investment strategy, feedback on net nets other members identify, discuss cigar butt investing best practices, issues with brokers, and, yes, the interesting net nets they’ve found. This greatly speeds up the time it takes you to identify an attractive buy candidate. The high level discussion on our forum is an invaluable resource - even for my own investing.
  5. Inner Circle Community Portfolio - Each year our members submit their top two picks to form a high quality community net net portfolio that we track over the next 12 months. These portfolios have performed very well versus the market and individual member portfolios. I find our yearly community portfolio a high quality pool of stocks to pick from for my own portfolio.

And, yes, we do offer a bulk screener that offers up to 1000 or so statistical net nets. Some extra enthusiastic members sift through these stocks, but just having a bulk list of net nets provided by a screener is one of the least valuable resource offerings we provide members.

So, if you’re asking, is Net Net Hunter worth it because you can get access to a cheaper screener - you’re really missing the point of the membership.

These 5 offerings from Net Net Hunter radically reduce the time and effort it takes to put together a good quality net net portfolio.

No more sifting through unbuyable junk to find something interesting to research. No more missing out on catalysts or other incredibly cheap stocks because you didn’t see them. We have a community all looking for them. No more wondering if your portfolio picks are optimal, statistically speaking - that’s why I developed Ansan 2.0.

And, if you’re more into a blend of qualitative and quantitative analysis, our Inner Circle Portfolio and forum discussion turns up some real gems. 

Is Net Net Hunter Worth It If You Already Have Access To A Bulk List Of Net Nets?

The amount of work you’re taking on if you don’t have help is LARGE. Let me walk you through it…

The heart of the membership is our Net Net Shortlist. There are simply too many net nets globally for any one person to go through unless they dedicate significant time or money to do so. We’ve been hand-filtering the roughly 1000 net nets available globally since 2012. As you might imagine, we’ve gotten really good at it.

A stock screener’s output has to be hand-filtered because all screeners are based on standardized data, and all standardized data contains errors and omissions. When you get smaller, moving down the market cap ladder, the errors are more common and larger. Market caps can be wrong because share counts can be wrong, for example. Maybe the statements aren’t available through their system because it’s a small company traded OTC, so you have to find them yourself and see what the stats are.

You can’t simply hit a button on a screener and filter for a high quality list of net nets that meet your criteria. Your resulting list will be based on those errors, and will therefore be of much lower quality then checking by hand… so we check by hand.

It takes our dedicated analyst about 30 hours each month to comb through our bulk list of net net stocks. It would take you longer, since we’ve built up significant skill doing it and so can cut down the time it takes to do the job.

What exactly do we do?  

Net Net Stock Filtering

We filter the bulk list of net nets by two groups of criteria: buyability and quality.

On the buyability side of things, we filter out companies with stock prices less than $0.01, market caps less than $1 million USD, and average daily volumes less than $1000 USD.  We think that this set of criteria results in a pool of companies that you can actually buy - and that’s important if you want to actually buy them to build a portfolio.

On the quality side of things, we look for firms that are not burning through their working capital too rapidly, have lower levels of debt to avoid bankruptcy risk, and have decent current ratios to ensure that NCAV is at least stable. We also avoid firms that are too large, since net net companies with market caps over $100M are associated with progressively lower returns, and we filter out firms that are selling shares because those are statistically associated with low returns or losses.

Again, it takes us about 30 hours per month to do this work, and it would ultimately take you longer. Fail to do it and you’re guaranteed to miss the better opportunities that our community is turning up.

Hiring a qualified analyst and paying him or her a skimpy $10 per hour to do the work would still cost you $300 each and every month… that's 6x what it would cost you to just join Net Net Hunter and let us handle that work for you.

Is Net Net Hunter Worth It If You Want To Do Your Own Analysis?

So, you think the Shortlist is a nice idea, but you’re still wondering if Net Net Hunter is worth it because you want to do your own analysis.

I get it. I insist on doing my own analysis too when I select a stock. But, think about it for a minute… wouldn’t it still be better if every so often someone was telling you of a stock that looks particularly attractive? If someone who obviously knew what they were doing said “look here,” wouldn’t it be worthwhile at least taking a look at what they dug up? You’d be a fool not to, and we have people pointing out potentially attractive buys on our Inner Circle Forum each week.

And then, where are you getting your raw list of net nets from? Is it filtered for basic buyability or quality? 

If you want to do your own analysis, you still need to start with some stock to research, and you might as well draw those stocks from a high quality list rather than sifting through complete trash to find something suitable. Utilizing our Shortlist means fishing where the fish are.   

Is Net Net Hunter Worth It If You Have A Small Portfolio?

One of the biggest concerns I hear from readers is that Net Net Hunter is not worth it due to a small portfolio. The thinking goes that the bang you’d get from membership does not justify the buck because the amounts invested are too small. 

Obviously, at some point this makes sense. If you’re managing $5,000 USD then membership fees would take up 10% of your portfolio, and 5% with a $10,000 portfolio. If this is you, and you don’t see any chance of building that pool of capital up meaningfully over the next year or two, then you may want to focus on improving your earning capacity and savings rather than investing. It will get you a bigger bang for the buck than picking net nets.

If your portfolio is over $10,000 though, you really have to start thinking about what it’s costing you to either not use the strategy or to spend all the time and effort to do the work yourself and ultimately miss out on the best picks.

You can’t match 200 members looking for great cigar butts and sharing them on our Inner Circle Forum. You’d have to work at investing full time to match our Shortlist & the number of investment leads that we turn up on the forum each month. Don’t you have other things to do with your time?

Is Net Net Hunter Worth It If You Have A Large Portfolio?

The other side of the coin are investors with too much money. Munger said that there is no longer a free lunch in investing - referring to buyable cigar butt stocks. He’s right, to a degree.

When I was running money professionally, I found that the strategy was still workable with as much as $5 million USD, and likely would work with as much as $10 million. Beyond that, you really have to start looking at near net nets and other sort of cigar butts.

We do discuss these on the forum, and some of them can accommodate up to a hundred thousand in average daily dollar volume, but these are typically other sorts of cigar butts and not net nets.

For the record, I do think that some of these near net nets and other sorts of cigar butts (low price to net tangible asset value with buybacks, for example) provide similar returns to net nets, but I would ultimately prefer to buy net nets.

I would place the upper limit of Graham's net net strategy at $10 million if you are wondering, is Net Net Hunter worth it if I have a big pool of capital. Anything beyond that and you need to start looking at boutique Wall Street brokers who can buy blocks for you. Something to think about.

So…. is Net Net Hunter Worth It?

I think I laid out a very compelling case for why Net Net Hunter membership is well worth it, and why net net investors should seriously consider membership.

In my experience, investors who do not get help implementing Graham’s strategy do not stick it out and eventually abandon it altogether. For some people, this is fine because their financial goals are “flexible” and they don’t mind not getting to where they initially planned financially or getting to those financial goals much later in life.

For anyone who really wants to earn the best returns with one of the last remaining "free lunch" strategies, not getting help means eventually abandoning the strategy and missing out on the wealth they could have built. Devostating.

So, if you want to make a serious go of it, if you insist on using Graham’s top performing strategy to earn unreasonable returns, you really have to join.

Do not be one of those people who would walk a mile to save a quarter. Sometimes you need to pay to acquire the right tools to get to your destination. 

Now, visit our signup page to get access to the high quality resources you need for long term success with net nets. Join Net Net Hunter Here.

Article Author: Evan Bleker

Article image (Creative Commons) by Kari Shea, edited by Net Net Hunter.