Git

A “Git” is a fantastically blunt, old-school piece of Wall Street slang for a company that is just outrageously, statistically cheap. The term was championed by the father of Value Investing, Benjamin Graham, to describe a stock trading for significantly less than its liquidation value. Think of it as the financial equivalent of finding a perfectly good, usable chair left on the curb; it might not be a designer piece, but it's functional and, best of all, free (or close to it). A git isn't a glamorous growth company or a technological innovator. On the contrary, it's often a boring, struggling, or downright ugly business that the market has given up on. The investment thesis for a git is not based on its future earnings potential but on its balance sheet. You are essentially buying a pile of assets—cash, receivables, inventory—for 50 cents on the dollar. It’s a purely quantitative and unemotional approach, a core tenet of what would later be called “Cigar Butt Investing.”

At its heart, a git is a mathematical certainty, or as close as one can get in the messy world of finance. The “story” behind the company is almost always terrible, which is precisely what creates the opportunity. Investors, driven by fear and pessimism, sell the stock down to a price that ignores the tangible value sitting right there on the company's books.

Benjamin Graham didn't just feel his way to these bargains; he developed a formula. His favorite hunting ground was for companies he called “Net-Nets,” which are the quintessential gits. The calculation is a brutal but effective measure of a company's rock-bottom value. A company is a Net-Net when its stock market valuation is lower than its Net-Net Working Capital (NNWC).

• The Formula: NNWC = Current Assets - Total Liabilities (including preferred stock and off-balance-sheet debt).
• The Purchase Rule: Graham's famous rule of thumb was to only buy these stocks when they were trading at a significant discount to this value, typically at two-thirds of NNWC or less.

This creates an immense Margin of Safety. You are buying the company for less than the value of its most liquid assets after paying off all its debts. In theory, the company could be shut down, its assets sold, all creditors paid, and you'd still get back more than you invested.

Companies don't become gits by accident. There's almost always a good reason for the market's disgust.

• Terrible Industry: The company might operate in a dying sector, like a buggy whip manufacturer in the age of the automobile.
• Recent Crisis: It may have just lost a major customer, faced a product recall, or reported a string of disastrous losses.
• Investor Neglect: Often, these are small, forgotten companies that no major analyst follows. They are simply invisible to the institutional investment world.

The value investor's job is to look past the grim narrative and focus on the numbers, betting that the balance sheet provides a cushion against permanent loss.

While finding classic Graham-style Net-Nets is harder in today's highly analyzed US and European markets, the “git” philosophy is far from dead.

• Unemotional and Systematic: It's a purely quantitative strategy, removing the guesswork and emotional bias from investing.
• The Power of Diversification: Git investing is not about picking one winner. It’s a portfolio strategy. You buy a basket of 15-20 of these cheap stocks, fully expecting some to fail. The statistical edge comes from the fact that, as a group, the winners (which may double or triple as they recover or are liquidated) will more than make up for the losers.
• Global Opportunities: True gits can still be found in less efficient, less popular markets, such as Japan or other smaller international exchanges.

• Value Traps: The biggest risk is the “melting ice cube.” A cheap company can simply keep getting cheaper as incompetent or predatory management burns through the very assets that made it a bargain in the first place.
• Patience is a Virtue (and a Necessity): The market can ignore a git for years. The catalyst that unlocks the value—be it a takeover, a liquidation, or a business turnaround—may take a very long time to appear, if it ever does.
• Psychological Toughness: It takes a strong stomach to own a portfolio of companies that everyone else considers junk.

Investing in gits is the ultimate expression of buying a company's assets, not its story. It's a reminder that a stock's price is not the same as its underlying value. While not a strategy for everyone, it teaches a powerful lesson: incredible bargains can be found in the places nobody else is willing to look. For the patient, disciplined, and statistically-minded investor, sifting through the market's trash can sometimes uncover real treasure.