Spring Portfolio Rebalancing: Value Investor's Checklist
How to review and rebalance your net-net basket in Q1 — when to hold, when to cut, and where to redeploy capital.
Portfolio rebalancing isn't just administrative tidying. For a net-net value investor, the annual spring review is a high-stakes decision: what to hold, what to cut, and where to deploy the released capital. The value investor's approach differs sharply from conventional wisdom.
The Three-Trigger Selling Framework
Graham's original framework had three sell triggers for net-net positions: (1) the stock price rises to at least NCAV, (2) the stock has been held for two years with no material price improvement and no positive catalyst, or (3) a better opportunity with a larger NCAV discount has been identified. Modern research broadly supports this three-trigger approach, though trigger (2) is now often extended to three years given the longer drawdown cycles of post-2008 markets.
☐ Check for going-concern language in latest annual report
☐ Confirm positive operating cash flow (at least 2 of last 3 years)
☐ Review insider activity — any director selling in the last 6 months?
☐ Check if holding has been held >3 years with score unchanged — time to exit?
☐ Screen for new net-net candidates to replace any positions sold
☐ Review overall portfolio concentration — any single position >7.5%?
☐ Check ISA allowance — can you shelter any gains before 5 April?
When to Hold Despite a Rising Price
One of the most common mistakes is selling a net-net the moment it approaches NCAV. If business fundamentals have improved during your holding period — rising cash balances, a new management team, a positive RNS — the stock may deserve a higher multiple than book value. Consider what Graham called the "earning power value" alongside NCAV when making the hold/sell decision.
Deploying Capital After a Sale
The reinvestment decision is as important as the sale. Sitting in cash waiting for the perfect opportunity is psychologically satisfying but mathematically costly. DipBuster's leaderboard is updated daily — if you've just sold a position, the screener will show you the current highest-scoring net-net candidates for immediate reinvestment consideration.
Disclaimer: Not financial advice. DipBuster is an information platform. Always do your own research before investing.