"A Review of Ben Graham’s Famous Value Investing Strategy: “Net-Nets”" was published by Alpha Architect on their highly acclaimed research site here.
A summary, of what we believe is the most comprehensive analysis of the subject matter to have been undertaken is provided below:
Benjamin Graham developed an investment strategy that involved purchasing securities for less than their “current-asset value”, “a rough index of the liquidating value”. We uncovered ten research papers that examined the returns achieved by investing in such securities which were conducted over a number of decades and across various geographies. In general, the research found that the strategy generated a remarkable level of outperformance. Our objective was to answer the question, “Could the returns reported in the research have been achieved by an investor in practice?”. To meet this objective, we developed a methodology to analyse the evidence and determine its reliability. Subsequently, we found that each of the studies suffered, or may have potentially suffered, from a number of biases which adversely impacted the reliability of the results contained therein. We therefore concluded that, in essence, a practitioner could not have achieved the returns reported in the research. Lastly, we briefly discussed the implications of our findings for practitioners of the investment strategy, as well as for evidence based investors at large.
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