This Value Investing Community Helps Net Net Investors Thrive
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Why should value investors join a value investing community?
A value investing community is a group of like-minded people who share ideas about value investing. More often than not, they share investment ideas — their so-called “best ideas."
I used to think value investing communities were all kind of an oxymoron — a waste of time at best.
Think about it. Professional value investors often hide their stock picks from third parties — unless required to disclose them by law — either because of the risk of coattail riders, or because they don’t want their clients to freak out — or both.
However, any value investor worth their salt knows that independent thinking is key for long-term superior returns in the stock market. If value investors gather to share investing ideas, then all of them copy their “best ideas," they are engaging in a sort of herd behavior.
I had my reasons to avoid value investing communities, even if they were free. Pay for a membership? No way!
I changed my mind after I joined Net Net Hunter, though.
Let me tell you why.
Rule Number One: Don’t Lose Money!
I joined Net Net Hunter almost a year ago.
I paid the subscription fee because the stock screener and the monthly shortlist of net nets seemed like a great place to look for ideas for my personal portfolio — not because it was a value investing community.
In the long run, the subscription fee would be a negligible cost if the shortlists helped me find great quality net nets and benefit from their extraordinary returns.
The membership also included access to the Inner Circle Forum, a place to “discuss investment ideas, investing strategies, books, stock picks, and other value investing topics.” I was skeptical — that seemed like the kind of value investing community I dreaded.
But I had some free time, so I decided to read some of the forum posts.
I got a very good first impression. Members were mostly small private investors like me. Most of them also had jobs or careers not related to finance.
They were managing their own net net portfolios, just as I was.
I found that most of the questions I wanted to ask — but was afraid to ask because they seemed dumb — were already answered in the Inner Circle Forum.
Questions like “How do I open an international brokerage account?” or “Where can I find financial information about Japanese companies in English?” had been answered already. Very useful answers, by the way.
There were also stock pick discussions in the forum, of course. A member mentioned one American net net that seemed nice, and I looked it up. The numbers “hit me over the head like a baseball bat” — like Buffett used to say when he found his beloved cigar butts.
Very excited about the discovery, and contrary to my tendency to keep my stock picks to myself, I went to the forum and published my assessment — it was a no brainer! It was a ridiculously cheap cigar butt!
Sure enough, I got a few responses right away.
Han, a Net Net Hunter member and a seasoned deep value investor, posted a comment that caught me off guard, though. It went as follows:
“Have you looked at how much the company has in total amount of operating lease obligations? I ask because beginning with all fiscal period reporting in 2019, all companies under US GAAP accounting standards (and various international standards too) will be required to report their lease obligations on the balance sheet as a liability. I wouldn't want anyone here to be surprised by a sudden increase in total liabilities in their company's next financial reports, especially when a company ceases to be a net net, and when this change can be well anticipated now.”
Net nets are stocks selling for a price below their liquidation value — i.e., the result of subtracting total liabilities from the value of current assets.
If total liabilities were going to increase substantially as a result of including operating leases as a liability in the balance sheet, then the liquidation value would decrease.
In this case, including the present value of the operating leases as long term liabilities meant the company was no longer a net net.
I didn’t buy the stock — talk about dodging a bullet!
On that day, Net Net Hunter truly proved its value to me — a value far in excess of the subscription fee I paid.
The Value of a Value Investing Community
But the value of the Net Net Hunter community is not just anecdotic.
Charlie Munger says he and Buffett are rich mostly because they are learning machines. They never go to bed without learning something new.
At the Inner Circle Forum, there’s always an interesting discussion going on.
Chances are you’ll end up learning something new every day.
Let me give you a list of things I get from this value investing community:
- Gather investment ideas (net nets) from others so that you can dig a little deeper by yourself.
- Discuss specific details about the financial statements of the net nets you’re studying.
- Discuss different investing strategies.
- Connect with deep value investors from all over the world.
- Help others in their journey by discussing books, and sharing interesting articles and videos.
- Learn, learn, learn!
- Keep yourself informed about stocks and markets where net nets are surfacing.
- Benefit from swarm intelligence.
The list could go a little longer, I guess. But you get the point.
Net Net Hunter is not just the net net screener Ben Graham would use today; it is a value investing community for deep value investors — probably the best there is, and it will only get better as more and more deep value investors join us and share their knowledge with all of us.
The knowledge we are constantly building there could probably help you avoid a major pitfall — as it did for me — but it will also help you build your perfect net net portfolio.
Join Net Net Hunter now, leverage the benefits of this great value investing community, and find valuable net nets to stock your portfolio and boost your long-term returns.