UK Net-Net Stocks: How to Find Shares Trading Below NCAV

Benjamin Graham's most powerful strategy is buying stocks below their Net Current Asset Value (NCAV). This guide explains how the screen works on UK markets, what a qualifying stock looks like, and how to check the live screener for the names that pass right now — because that list changes as prices move.

Understanding NCAV: The Graham Formula

Net Current Asset Value = Current Assets minus Total Liabilities (all liabilities, not just current ones). The formula strips out fixed assets entirely, valuing the company only on liquid assets. When a stock trades below this conservative measure, you are buying the business for less than its liquidation value even in a fire sale. Graham called this a "margin of safety" — the discount provides a buffer against being wrong about the fundamentals.

Academic validation is extensive. A 2010 study by Tobias Carlisle and colleagues found UK net-net portfolios returned 31.2% annually over a 10-year period vs 20.5% for the FTSE index. That 10.7 percentage point annual outperformance, compounded over a decade, produces dramatically different outcomes.

What Makes a Stock Qualify

A UK net-net has to clear a deliberately harsh test: its market cap must sit below its Net Current Asset Value — current assets minus all liabilities — so you are effectively buying the liquid assets for less than they'd fetch in a wind-down, and getting the operating business for free. On the LSE and AIM, names that pass tend to share a profile: small or micro-cap, lightly followed by analysts, often out of favour after a disappointing result, with a cash-and-receivables-heavy balance sheet and little debt.

The catch is that the list changes constantly. A stock qualifies one week and, after a 20% rally or a fresh set of accounts, no longer does. That is why we don't hard-code a "current net-nets" list into this article — a fixed list goes stale almost immediately and is exactly the kind of thing that misleads readers.

How to Use This

Net-nets work best as a basket — buy 10-20 positions and hold for 12 months. The edge comes from diversification, not individual picks. Rebalance annually: sell positions that have risen above NCAV, reinvest in new qualifying names from the screener.

This is not investment advice. Net-net strategies involve significant risk — qualifying companies may have deteriorating fundamentals or balance-sheet issues not captured by a snapshot ratio. Verify NCAV against the latest audited accounts and always do your own due diligence.