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Negative Shareholder Equity Isn’t All That Bad After All

Negative Shareholder Equity Isn’t All That Bad After All

In many respects, the style of value investing is built around shareholder equity and book value. Benjamin Graham and David Dodd built their net-nets investment strategy on book value, with the logic that if you could buy a stock for less than liquidation value, you would make money. Since Graham and Dodd published their landmark text, Security Analysis in 1934, many other studies have reached the same conclusion, particularly the research by Eugene Fama and Kenneth French. However, over the past two…

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