A buffer that protects against mistakes, dilution, or weaker assets than expected.
Published: 2025-12-20
Definition
Margin of safety is the gap between a conservative intrinsic value estimate and the current market price.
Why it matters
The bigger the discount, the more room you have for errors in your estimates, potential dilution, or asset write-downs.
Where to apply it
In net-nets, compare price to NCAV per share or cash per share; require a healthy margin before buying, and size positions based on how reliable the assets and cash flows are.