July 9, 2026
Modern Deep Value Investing: From Ben Graham to Tobias Carlisle
How quantitative pioneers like Tobias Carlisle and Wesley Gray took Benjamin Graham's ideas and built a systematic, emotion-free framework for beating the market.
Benjamin Graham invented the playbook. Warren Buffett refined it. But a new generation of quantitative investors — led by figures like Tobias Carlisle and Wesley Gray — has taken deep value investing somewhere Graham himself never imagined: into the realm of rigorous data science, systematic rules, and mechanical execution.
The result is a style of investing that is at once faithful to Graham's original insights and radically more disciplined in its application. Understanding this evolution is essential for any serious value investor today.
Where It All Started: Graham's Bargain-Hunting Framework
Benjamin Graham's core insight, developed during and after the Great Depression, was simple but radical: the stock market misprices securities. Stocks are not always worth what the market says they are. A company trading for less than its liquidation value — its net current asset value — is almost certainly mispriced, and patient investors who buy these bargains in bulk will be rewarded when the market corrects itself.
Graham's approach was inherently quantitative for its time. He sought specific numerical thresholds: stocks trading below two-thirds of NCAV, low price-to-earnings ratios, manageable debt levels. He was not interested in the narrative around a company. He wanted the numbers.
Yet even Graham acknowledged that his cigar-butt approach was not elegant. These are unloved, often struggling companies. Owning them requires a cast-iron stomach and the conviction to hold while the crowd runs the other way.
Tobias Carlisle and the Acquirer's Multiple
Tobias Carlisle is perhaps the most prominent modern torchbearer of quantitative deep value investing. An Australian-born fund manager, author, and researcher, Carlisle runs Acquirers Funds and manages the $ZIG ETF, which applies his deep value methodology in a real portfolio.
His 2014 book, Deep Value: Why Activists and Other Contrarians Battle for Control of Losing Corporations, made a provocative argument: the best value stocks are not the ones with the best businesses. They are the ones with the worst businesses — the ones so beaten down and unloved that the market has dramatically overshot its pessimism.
Carlisle developed the Acquirer's Multiple as his preferred valuation metric:
Acquirer's Multiple = Enterprise Value / Operating Earnings
Where Enterprise Value accounts for a company's total cost of acquisition — equity market cap plus net debt — and Operating Earnings strips out the accounting distortions that can make a company look artificially cheap or expensive. Carlisle showed that sorting stocks by this metric and buying the cheapest decile has historically produced extraordinary returns.
His research revealed something counterintuitive: the stocks that feel the worst to own are often the best to buy. Companies with declining revenues, shrinking margins, and negative headlines tend to be priced for catastrophe. When catastrophe doesn't fully materialize, the rebound can be powerful.
Wesley Gray and the Case for Mechanical Investing
Wesley Gray, founder of Alpha Architect and a former U.S. Marine with a PhD from the University of Chicago, takes an even harder line on the importance of rules-based investing. His work, particularly the book Quantitative Value (co-authored with Carlisle), demonstrates that human judgment in the investment process is not just unhelpful — it is actively harmful.
Gray's research draws on decades of behavioral finance: investors are systematically overconfident, loss-averse, prone to recency bias, and incapable of sticking to a strategy through periods of underperformance. Even professional fund managers who claim to use a value framework routinely override their own models at the worst possible moments — selling when the pain is greatest, buying when momentum is strongest.
The solution, Gray argues, is to remove yourself from the process as much as possible. Define your rules in advance. Apply them mechanically. Do not deviate. This is what he calls systematic deep value investing.
The evidence backs him up. Backtests consistently show that simple, rules-based value strategies outperform discretionary managers over long time horizons — not because the rules are magic, but because they enforce the discipline that humans cannot maintain on their own.
The Common Thread: Mean Reversion
Whether you are buying net-nets in Graham's style or running the Acquirer's Multiple screen in Carlisle's style, the underlying bet is the same: mean reversion.
Corporate performance reverts to the mean. Terrible businesses often improve, get acquired, or liquidate — all of which tend to unlock value. Spectacular businesses face competition, regulation, and disruption that drag returns back toward average. The market, however, extrapolates both good and bad performance into the future, creating systematic mispricings at both extremes.
Deep value investors sit at one end of this spectrum — buying the most hated, most beaten-down companies — and collect the premium that comes from tolerating discomfort that most investors cannot stand.
Why Net-Nets Fit Perfectly Into This Framework
The net-net strategy Graham pioneered is, in many ways, the purest expression of modern systematic deep value. It is:
- Purely quantitative — the screen is based on balance sheet math, not qualitative judgment
- Mechanically executable — you buy everything below a threshold and sell when it crosses back above it
- Emotionally brutal — the stocks look terrible, which is precisely why they are cheap
- Statistically robust — decades of academic research confirm that net-nets outperform the broader market over long periods
Carlisle himself has written approvingly about the net-net strategy, noting that while true Graham-style net-nets are rarer today than in the 1930s, they still appear in international markets — particularly in Japan, South Korea, and smaller European exchanges — often in sufficient numbers to build a diversified portfolio.
The Practical Challenge: Finding the Stocks
The biggest barrier to implementing a net-net strategy has never been the theory. The theory is simple. The barrier has always been the data work: scanning thousands of companies across dozens of markets, pulling balance sheet data, calculating NCAVPS accurately, and repeating this process regularly as numbers change.
This is exactly the problem that systematic tools solve. Just as Carlisle and Gray use quantitative screens to identify their deep value candidates across the entire investable universe, a dedicated net-net screener automates the most tedious part of the process — leaving the investor to focus on portfolio construction and discipline.
The data underlying our screener is sourced from FactSet — one of the world's leading institutional financial data providers, used by professional asset managers and hedge funds globally. This ensures that the NCAVPS figures you see are accurate, comprehensive, and up to institutional standards.
The Hardest Part: Staying the Course
Every serious practitioner of deep value investing — Graham, Carlisle, Gray, and others — emphasizes the same uncomfortable truth: this strategy will test you.
Deep value tends to underperform during bull markets driven by growth and momentum. During the 2010s, for example, value investing broadly lagged for nearly a decade as technology stocks dominated. Investors who abandoned the strategy at the trough missed the subsequent mean reversion when value staged a sharp comeback.
Carlisle has been characteristically blunt about this: "Deep value is not for everyone. It requires holding stocks that make you feel sick, during periods when the strategy looks broken, while the rest of the market tells you you're an idiot." Gray frames it similarly — the strategy's edge comes precisely from the fact that most people cannot emotionally tolerate it.
This is why the mechanical, rules-based approach matters so much. A pre-committed set of rules enforced by a screener removes the temptation to second-guess, to "wait for a better entry," or to sell at the worst moment because the news has turned negative.
Conclusion: The More Things Change...
Modern deep value investing, as practiced by Carlisle, Gray, and their contemporaries, is sophisticated in its methodology and rigorous in its data requirements. But at its core, it rests on the same bedrock insight that Graham articulated nearly a century ago: the market is not always rational, assets have intrinsic value, and disciplined investors who buy below that value will be rewarded.
The tools have changed. The data sources are more comprehensive. The backtests are more rigorous. But the fundamental act — buying hated, undervalued companies with a margin of safety and holding them with discipline — is unchanged.
For individual investors, the net-net approach remains one of the most accessible entry points into this world. It is transparent, mechanical, and grounded in balance sheet reality. And with the right tools to surface the opportunities, it is more actionable today than at any point in history.