There are some investors who buy stocks that are trading below their liquidation value because they believe that they can make a profit out of their investments after the market has reappraised the share prices up to a value near or above the liquidation value in the short term.
These investors calculate the liquidation value of these so-called “Benjamin Graham net-net working capital” stocks as “cash and short-term investments + 75% of receivables + 50% of inventory – total liabilities.”
Here are some results of my research for stocks whose share prices are trading below their net-net working capital.
Benitec Biopharma Inc
The first stock under consideration is Benitec Biopharma Inc (NASDAQ:BNTC), a Hayward, California-based biotech developer of innovative treatments for genetic diseases.
The stock was trading at $7.68 per American Depository Receipt at close on Wednesday, which is largely below the net-net working capital of $12.50 per ADR calculated