Better Net-Nets: Quality Filters That Raise Win Rates

Alignment and governance filters

• Insider ownership sweet spot: 5-30 percent; enough to care, not enough to steamroll minorities.
• Board independence: at least one truly independent financial expert.
• Related-party transactions: small, disclosed, and arm's length—or avoid.

Balance-sheet strength filters

• Cash/liabilities comfortably above 1.0x.
• No near-term debt maturities that require new equity.
• Clean audit opinions with no going-concern language.

Operating quality filters

• Gross margins stable or improving despite price pressure.
• Operating cash flow not chronically negative.
• Customer concentration monitored and disclosed.

Process to apply

1) Start with price <= two-thirds of adjusted NCAV.
2) Run quality filters above; drop names that fail two or more.
3) Re-rank survivors by discount depth and catalyst visibility.
4) Size larger in high-quality subset; basket the rest or skip.

Internal links and tools

• Balance-sheet events: Shares outstanding changes
• Volume tell: Interesting volume events
• Price pressure: Near-lows scanner
• Sentiment: Short interest changes
• More reading: Resources hub

Compliance note

This guide is educational and not investment advice. Do your own research or consult a professional adviser.