How to Set Up a Stock Screener the Way Graham Would Have

Graham used a legal pad and handwritten notes. Today you have screening tools that can process tens of thousands of stocks in seconds. The advantage is computational. The risk is that more filters produce narrower (and potentially over-fitted) results. Here's how to build a value screener that Graham himself would recognise.

The Five Core Filters

1. Price/NCAV ratio below 0.66. This is Graham's primary net-net trigger. Current assets minus all liabilities, divided by market cap. Values below 0.66 indicate you're buying the business for less than two-thirds of its liquidation value. This is the hardest criterion to satisfy — expect 2-5% of the market to qualify at any time.

2. Current ratio above 2.0. Current assets divided by current liabilities. This measures short-term solvency. A ratio below 2 suggests the business may struggle to meet near-term obligations — exactly the kind of operational risk that can destroy a net-net investment before it recovers.

3. P/E ratio below 15, or no P/E with positive cash flow. Graham wanted to see earnings power alongside asset value. A stock with a P/E of 8 and an NCAV discount is two-for-one: cheap on both earnings and assets.

4. Insider ownership above 5%. Management skin-in-the-game is a proxy for alignment. Directors who own 5%+ of the business are unlikely to destroy shareholder value through poor capital allocation — their own wealth is at stake.

5. Market cap below £500m / $500m. Larger companies are too widely followed for deep mispricing to persist. Net-net opportunities exist overwhelmingly in the small and micro-cap space, below institutional radar.

2','PE<15','Insiders>5%','MktCap<500m'],[3,45,32,28,62],'#FF6B00',400,120) ?>

Secondary Filters to Add

Once you've applied the five primary filters, add: no accumulated losses exceeding book value (debt accumulation danger); no recent equity dilutions above 15% (indicates cash burn); positive operating cash flow for at least 2 of the last 3 years.

Running This on DipBuster

DipBuster's Stocks page allows filtering by country (UK/US), sector, and the DipBuster Score which incorporates NCAV ratio as its highest-weighted component. Set filter to UK → sort by Score descending to surface the highest-scoring value opportunities. The net-nets filter surfaces only stocks our algorithm has confirmed pass the 0.66× NCAV threshold.

All screening criteria are for educational purposes. Stock screening does not constitute investment advice. Always conduct additional due diligence before investing.