I'm rolling out the last of three annual tracking portfolios, the 2023 edition of my Double Net Value Portfolio. It is comprised of seemingly cheap names relative to net current assets (current assets minus total liabilities).
I've put this portfolio together for several years and the results, at times, have been decent. Last year was inconclusive. Over the years, double nets have been a fairly fertile hunting ground for acquisitions, but it has been a while since we've seen an acquisition within this small investment pond.
Screening criteria include the following:
- Companies trade at between 1 and 2 times net current asset value (NCAV)
- Minimum market cap $100 million (up from $75 million last year)
- No development-stage medical/pharmaceutical/biotech companies
- Minimum share price $2.00
This year, 45 names make the cut, up from last year's 23, and they again are equally weighted for tracking purposes. Repeat offenders from last year include Gencor Industries (GENC) , FutureFuel Corp. (FF) , American Outdoor Brands (AOUT) , Avnet Inc. (AVT) , VOXX International (VOXX) , Olympic Steel (ZEUS) , TrueCar (TRUE) and NetGear (NTGR) .
Sitting at the top of the portfolio in terms of market cap is controversial Robinhood Markets (HOOD) , which trades at 1.18x NCAV. It is one of the bigger double-nets you'll see, with a market cap of $7.6 billion. HOOD shares are down 53% year to date
Returning to the portfolio is 2021's best performer, Crimson Wine Group (CWGL) , which trades at 1.83x NCAV and has seen its shares fall 29% so far in 2022. Also making an appearance is footwear name and busted initial public offerig Allbirds (BIRD) , which trades at 1.61x NCAV and is down 82% year to date.
This portfolio looks a bit better than last year's but is still not the best quality of double-nets I've seen. In terms of portfolio statistics, the average market cap for companies in this portfolio is about $635 million and they currently trade at an average of 1.59x NCAV (ironically, the exact same as the past two years) and 1.06xX price to book value.
Here's the 2022 Double Net Value Portfolio in order of market cap:
Robinhood Markets (HOOD)
Avent Inc. (AVT)
C3.ai Inc. (AI)
Fulgent Genetics (FLGT)
American Well Corp. (AMWL)
Matterport Inc. (MTTR)
Dril-Quip Inc. (DRQ)
ScanSource Inc. (SCSC)
NetGear Inc. (NTGR)
ACM Research (ACMR)
Insteel Industries (IIIN)
Butterfly Network (BFLY)
Quanterix Corp. (QTRX)
National Presto Industries (NPK)
Hyliion Holdings (HYLN)
Gevo Inc. (GEVO)
Cue Health Inc. (HLTH)
Allbirds Inc. (BIRD)
Energy Vault Holdings (NRGV)
Solid Power Inc. (SLDP)
ON24 Inc. (ONTF)
Daily Journal Corp. (DJCO)
OraSure Technologies (OSUR)
FutureFuel Corp. (FF)
Olympic Steel (ZEUS)
Mammoth Energy Services (TUSK)
Miller Industries (MLR)
Blade Air Mobility (BLDE)
908 Devices Inc. (MASS)
Pulmonx Corp. (LUNG)
Genie Energy (GNE)
TrueCar Inc. (TRUE)
VOXX International (VOXX)
1Stdibs.com Inc. (DIBS)
Berkeley Lights Inc. (BLI)
Gencor Industries (GENC)
Intevac Inc. (IVAC)
Fortitude Gold Corp. (FTCO)
American Outdoor Brands (AOUT)
Webco Industries (WEBC)
Unifi Inc. (UFI)
Crimson Wine Group (CWGL)
Turtle Beach Corp. (HEAR)
Fonar Corp. (FONR)
Amtech Systems Inc. (ASYS)
I will not be taking positions in all of these names, as I've done with my 2023 Tax Loss Selling Recovery Portfolio and Triple Net Value Portfolio.
(Please note that due to factors including low market capitalization and/or insufficient public float, we consider DIBS, BLI, GENC, IVAC, FTCO, AOUT, WEBC, UFI, CWGL, HEAR, FONR and ASYS to be micro-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.)
