Everything You Need To Know About Net Net Deep Value Hunting [In-Depth]

ValueWalk’s Raul Panganiban interviews Evan Bleker, founder of Net-Net Hunter, and author of “Benjamin Graham’s Net-Net Stock Strategy.”

Q2 2020 hedge fund letters, conferences and more

Interview with Evan Bleker

Transcript

Hello podcast listeners. Today is a very special episode with Evan Bleker, founder of Net-Net Hunter, and author of “Benjamin Graham’s Net-Net Stock Strategy”. Before this he was a consultant for Scottish Enterprise. He earned his Bachelor’s in Philosophy from Simon Fraser University. In today’s episode we discuss his approach to investing and his recent book Benjamin Graham’s Net-Net Strategy. I want to welcome Evan to the show, and I want to welcome our listeners to a very special episode.

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Welcome to ValueTalk with Raul.

Just wanted to welcome all our listeners to a very special episode. I have Evan Bleker, Co- founder of Net-Net hunter and author of “Benjamin Graham’s Net-Net Stock Strategy.” And Evan, welcome to the show.

Thanks a lot. Great to be here.

All right. Yeah, if you could just begin with your background and what led you to investing?

So my name is Evan. I run the site netnethunter.com and I originally got started in investing in high school during a senior class I was taking, I think it was some sort of consumer economics course or whatever, but they had an investment game there. And I never heard about stocks or anything like that. And I was quite surprised that you can actually buy pieces of a company are things that at least look like they moved up and down, you can make a lot of money on this was in you know, 1999 and a lot I remember sitting there, looking at the stock charts and, and seeing these, these squiggles there on the chart, and I was buying the ones that were close to the bottom Have the rings that look like they were good bargains. I didn’t know anything about value investing back then. But my friends were all buying the tech stocks and, and they were just absolutely crushing me at this game. They’re up, you know, hundreds of percent over a course of a couple months and I was down. So I was a little bit discouraged, but that kind of planted the seed with stocks and investing. And then I didn’t go to university right away. So I ended up taking a pretty terrible job and, but the good thing is I ended up stocking away a lot of money. So I had, you know, this big chunk of money and I need to do something with it. So I figured, okay, well, I’ll go to the bank, and I’ll talk to the financial advisor there. And I’ll you know, get into good mutual fund and, you know, whatever else. So I went there and she just tried to push these terrible funds on me. I didn’t know much about investing, but I knew when a product was, you know, complete garbage. So I looked at these things and I’m like, Are you kidding me? Really want me to buy knees like this with a lot of money that I’ve saved, you know, for 19 or 20 year olds. And so that really started the journey after that. So I figured, you know, if, if I’m gonna invest my money with good outcomes, then I really have to get a lot of education behind myself. So I just started reading a lot of books and I spent a considerable amount of time diving into investing and you know, going through different paths and finding dead ends and then eventually stumbled on value investing with Buffett’s, like most people do. And then when I realised how difficult that was to follow Buffett, I turned to Graham and then that proved even difficult and I almost gave up investing but in 2009 or 2010. I remember reading some blog, I think it was old school value and I think I think Jay was writing on old school value that that he was investing these things called net nets. And I’m like, Well, that sounds interesting. I think I read about that. So I went back into security analysis. And, and I tried to look at, you know, what Graham had said about net nets. And it turns out Yeah, this is, you know, one of the best strategies that Graham was recommending. And I ended up just toying with the idea of buying that nets. And then finally, I took the plunge that I bought a couple. And by luck, they ended up working out and so that started me along the road of net net investing, if you will.

Very cool. And so you describe your approach now that you use mostly is the net-net approach.

Yeah, I mean, I’m a net investor at heart and my preference is to buy companies that are trading, or that meet the net net criteria, the basic net net criteria, but then I also look for sweeteners. So these are characteristics about a company or about a stock that make it seem like it’s either going to be a bigger winner than most of their nets, or that’s going to have higher likelihood of working out.