When to Sell a Net-Net: Exit Rules That Keep Gains
Primary exit triggers
- Value reached: Price crosses 0.9-1.0x adjusted NCAV or NTAV.
- Catalyst done: Tender, liquidation payment, or asset sale executed—take cash and move on.
- Time stop: Pre-set holding window (6-18 months). If nothing happens, exit or shrink size.
- Deterioration: New dilution, leverage spike, working-capital quality drop, or governance blow-ups.
Playbook to avoid round trips
- Scale out in tranches near target value.
- After tenders, reassess post-deal float and liquidity before holding residual.
- Avoid anchoring—if the thesis changed, reset the position to zero and re-underwrite.
Monitoring checklist
- Track share count every quarter and after press releases.
- Recompute adjusted NCAV after each filing.
- Watch volume/price action around filings for liquidity to exit.
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.
Frequently Asked Questions
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Do I wait for NCAV exactly?
Many sell between 0.9-1.0x NCAV to avoid round-trip risk once the discount closes.
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What if the catalyst slips?
Set a drop-dead date; if deadlines move without new evidence, trim or exit.
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Should I hold for compounders?
Only if the business quality and reinvestment runway improve materially—otherwise recycle into fresher discounts.