It's a Wrap: My Final 40 Triple-Net Stocks

One thing is certain: Triple-nets are not a common investment hunting ground, but some may be the recipe for the next ETF.
Stocks quotes in this article: WIRE, BHE, SSYS, RAMP, DRQ, FIT, ASTE, JOUT, NPK, HZO, CWGL, LRN, CNXN, NTGR, RTEC, SCSC, AGX, CJ, ACLS, LASR, OSUR, REX, ADTN, DGII, KE, MLR, TRUE, PKE, NWPX, HOFT, VRAY, ARLO, RCKY, SPNE, GHM, ZEUS, CIX, GDRZF, GSIT, AMSC, ENZ, ESCA, DZSI, PCTI, CLXT, IVAC, CYBE, AIRG

Today, I'll wrap up the 2019 Triple-Net Portfolio by revealing the remaining 40 qualifying companies. I've already rolled out the eight that are most intriguing to this value investor, (LiveRamp Holdings (RAMP) , Dril-Quip (DRQ) , Fitbit (FIT) , Astec Industries (ASTE) , Johnson Outdoors (JOUT) , National Presto Industries (NPK) , MarineMax (HZO) , and Crimson Wine Group (CWGL) ) but I'll be tracking all 48.

The idea is to see whether a passive approach (equal weighting all 48 names) can outperform an active management approach (equally weighting the eight that I selected) for a group of companies trading at relatively low multiples of net current asset value or NCAV. Last year, a passive approach won by a longshot, and considerably outperformed the Russell Microcap Index, which is the most appropriate benchmark in this case.

Companies are listed in order of market cap, largest to smallest, along with the ratio of price to net current asset value.

Encore Wire Corporation

(WIRE)

2.7

Benchmark Electronics, Inc.

(BHE)

2.36

Stratasys Ltd

(SSYS)

2.51

K12 Inc.

(LRN)

2.99

PC Connection, Inc.

(CNXN)

2.53

NetGear, Inc.

(NTGR)

2.45

Rudolph Technologies Inc

(RTEC)

2.77

ScanSource, Inc.

(SCSC)

2.28

Argan, Inc.

(AGX)

2.04

C&J Energy Services Inc

(CJ)

2.32

Axcelis Technologies Inc

(ACLS)

2.44

Nlight Inc

(LASR)

2.78

OraSure Technologies, Inc.

(OSUR)

2.83

REX American Resources Corp

(REX)

2.88

ADTRAN, Inc.

(ADTN)

2.29

Digi International Inc.

(DGII)

2.8

Kimball Electronics Inc

(KE)

2.33

Miller Industries, Inc.

(MLR)

2.56

TrueCar Inc

(TRUE)

2.49

Park Aerospace Corp

(PKE)

2.38

Northwest Pipe Company

(NWPX)

2.47

Hooker Furniture Corporation

(HOFT)

2.82

Viewray Inc

(VRAY)

2.98

Arlo Technologies Inc

(ARLO)

2.16

Rocky Brands Inc

(RCKY)

2.35

SeaSpine Holdings Corp

(SPNE)

2.68

Graham Corporation

(GHM)

2.6

Olympic Steel, Inc.

(ZEUS)

2.47

CompX International Inc.

(CIX)

2.89

Gold Reserve Inc.

(GDRZF)

2.41

GSI Technology, Inc.

(GSIT)

2.55

American Superconductor Corp

(AMSC)

2.95

Enzo Biochem, Inc.

(ENZ)

2.59

Escalade, Inc.

(ESCA)

2.45

DASAN Zhone Solutions Inc

(DZSI)

2.27

PC Tel Inc

(PCTI)

2.78

Calyxt Inc

(CLXT)

2.46

Intevac, Inc.

(IVAC)

2.14

CyberOptics Corporation

(CYBE)

2.79

Airgain Inc

(AIRG)

2.73

I will be periodically posting performance updates throughout the coming year. One thing is certain: triple-nets (companies trading between 2x and 3x NCAV) are not a common investment hunting ground, and it's a technique that could only be devised by the mind of an off-the-wall deep value investor. But that's how new methodologies are developed. While not all will bear fruit, some may be the recipe for the next ETF.

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At the time of publication, Jonathan Heller was Long FIT.

TAGS: ETFs | Investing | Markets | Stocks | Trading

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