Managed to get a copy of a very rare publication going back all the way to 1932, written by Benjamin Graham in Forbes three years after 1929 stock market bubble crashed. I am now understood what is being said in the book of Security Analysis. If you look at the table above, many of those companies were really selling below cash, paying 50 cents for a dollar. It was really insane. This was what Ben really means by Mr. Market that suffers emotional problems.
Most investors fear that the company will not survive the great depression, potential accumulation of losses will wipe out all the cash, so the only answer was to sell, sell and damn it, sell!!!!!!!!!!!!!!!!!!!!!!!!!! If you have no confidence why not just close down the company and distribute the cash? They were really silly!
I do not think we can find many occasions like this post great depression. I found only one company in 2006, which was Oriental holding sold below its net current asset.
Nonetheless, there are some lessons to take home, watch out for fear of recession assuming the earning will decelerate significantly, causing significant mispricing.
For those of us subscribed to value investing, especially love buying into great bargains based on book value, from personal investing experience, buying at low book value, i.e. NTA/share rarely provide great returns even in the event of the companies we to be taken to private or acquired.
I remembered Courts Mammoth was taken private significantly lower than its NTA, 1.20 for 1.65 - 1.80, account receivables was big part of that asset. Great for those want to buy the whole company but not so great to minority shareholders. There is another case recently where Scientex Inc taking over Scientex Packaging via share swap, 1.30 for NTA of 1.95.
However, if we can find companies selling for 2/3 of their Net Cash Assets value, that will be a great bargain, I will definitely will pound it. Sooner or later, the market will recognize it, adjust to at least to its net current asset/share.
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