Warren Buffett's investing theory
Buffett's mentor Benjamin Graham
Mentor to Buffett, Benjamin Graham recommended that if you wanted to find cigar butt-like shares then you should look for those Companies whose current assets are greater than their total liabilities. Whatever this net figure is if it is equal to or slightly greater than the total market capitalisation of the Company then you've found a bargain. However, Graham caveats this by suggesting that these sorts of businesses will have a very depressed price for one or more particular reasons. As such he suggests that you should only buy into these sorts of Companies when there are a number of them available.
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