I checked out Myriad Pharma (MYRX). They looked interested at first. But in researching, in Dec. they announced a merger (acquisition) of Javelin (JAV) which will be very dilutive to existing shareholders. JAV is not a Net Net Stock, but it has drug that has passed Phase III trials. I probably would have been interested in MYRX before the merger. Now, for me it is speculative, with no margin of safety. And I do not know how to value revenune or profits from drugs that have not been approved for use in the United States. Thanks for the tip, though. If you have any more ideas please post another comment or email me: chroma at chromainvesting dot com.

Thanks for stopping by. I made a healthy return on another Net Net stock that Klarman owned called FACT. Although he still owns the stock and I sold it. You are correct that quality of assets is vital when investing in Net Nets. I think it was Klarman who wrote about orderly liquidation vs. fire sale liquidation in his book Margin of Safety. I have assumed that inventory which has recently declined was not a problem. Although I am a little concerned about the increase in Accounts receivable and will update the post to reflect that as a risk, I am comfortable with Graham’s margin of safety of 33% on the NCAV value, which I have used to determine my purchase price.

Thanks for stopping by. I am a big fan of Jae’s site, and you will see references to it throughout my blog. I think his Net Net working capital is a good conservative basis to use for the low end of the Net Net range. I often use it as my buy price. Sometimes, I feel that it is o.k. to use Graham’s original formula which was Net Current Asset Value discounted by his margin of safety, which is what I did for VOXX. You are bringing up a very important point, and one I will address in a future post: How is the best way to use Graham’s NCAV idea, and if it should be updated, how is the best way to update it. Jae Jun has his version. Klarman and Whitman have theirs. Over time I will develop my own as well. Currently, I use a range.

Thanks for the suggestion of other stocks to review. Almost all I own, have looked at or am reviewing, but MYRX is new to me and I will be sure to check it out. Thank you!
ENWV- I have posted about previously, and why I did not purchase shares. http://chromainvesting.com/2009/12/31/endwave-enwv-a-ncav-stock/

QXM- I own shares of XING which is currently in the process of divesting itself of QXM. As a shareholder of XING I am entitled to approx. .4 share of QXM for every share of XING I own. So, I am already playing the QXM position, but one step removed. I do not plan on selling my QXM shares when I receive them, unless further analysis suggests that I should. http://chromainvesting.com/2009/12/01/qiao-xing-universal-telephone-inc-xing-net-net-stock-buy/

LTON- you will note that I have just posted that I bought shares of LTON yesterday. Just too slow to get the posting up before you commented. http://chromainvesting.com/2010/02/10/linktone-lton-ncav-stock-buy/

The quality of assets is also an important aspect of investing in net nets.

i punched in VOXX in my Net Net spreadsheet by Jae Jun which uses Net Net Working Capital which is

Net Net Working Capital = Cash and short-term investments + (0.75 * accounts receivable) + (0.5 * inventory) – Total Liabilities

this works out to $4.65/share. That should put in a real floor on this stock. There are a couple of companies that actually trade below Net Net Working capital, maybe you could look at them further.

OBAS – NNWC is $1.62
ENWV – NNWC is $7.09
NCTY – NNWC is $8.52
LTON – NNWC is $2.54
QXM – NNWC is $5.71
GRO – NNWC is $2.54
MYRX – NNWC is $6.20

Feel free to check these out, looking forward to your thoughts on a couple of them.

http://www.oldschoolvalue.com/investment-tools/new-net-net-graham-spreadsheet/?source=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+OldSchoolValue+(Old+School+Value)&utm_content=Google+Reader