While GuruFocus now follows the holdings of all U.S. investors who file a 13-F form (available with the Premium Plus membership), it can be beneficial to have added conviction than to simply know what the gurus are buying.
For this, GuruFocus provides a Triple Buys page to list stocks that gurus, insiders, and the company itself are all buying. Famed investor Peter Lynch wrote that insiders buy stock because they believe the price will increase, while share buybacks increase the portion of the company that shareholders own.
Employers Holdings (EIG, Financial)
Paul Tudor Jones (Trades, Portfolio) and three other gurus increased their stakes in Employers Holdings during the first quarter. Director Michael D. Rumbolz purchased 2,000 shares total on May 15 and June 12, while director Michael McSally purchased 2,000 shares on May 4, and director Richard Blakey purchased 1,000 shares on Feb. 27. In addition, the company is buying back shares at a rate of 15.6%.
The company is a specialty provider of workers’ compensation insurance to small businesses in low to medium hazard industries. The stock price rose marginally by 3% over the past year, closing at $22.50 on July 7. When compared to the Peter Lynch earnings line, the stock is undervalued.
Over the past five years, the revenue growth rate was 21.7%, while EBITDA grew by 11.5%. In 2014, EBITDA per share was $3.96, up from $2.24 the year before. The company’s current dividend yield is 1.07%, and the payout ratio is 7%.
Data I/O Corp (DAIO, Financial)
Jim Simons (Trades, Portfolio) is the only guru who holds in a position in Data I/O, and he added to his stake during Q1 to hold a total of 284,700 shares. Director Brian Crowley purchased 1,604 shares of the company in March, while the share buyback rate is 15.1%.
Data I/O manufactures and sells programming systems for electronic device manufacturers, specifically high-growth areas such as high-volume users of flash memory and microcontrollers. The stock price rose 10% over the past year, and closed at $3.26 on July 7. The current P/E ratio is 16.86 and the P/S ratio is 1.14.
After posting losses in 2012 and 2013, Data I/O reported net income of $1.1 million last year.
Free cash flow, however, has been in the red since 2011. Last year, the company reported free cash flow of $-0.66 million.
First Acceptance Corp (FAC, Financial)
Jim Simons (Trades, Portfolio) is also the only current guru shareholder in First Acceptance with 0.54% of shares outstanding. During the first quarter, Simons increased his holding marginally by 4.16%. The most recent insider buy is from director Lyndon Olson Jr. who purchased 50,000 shares on May 15. The company’s rate of share buybacks is 15.1%.
First Acceptance is a retailer and underwriter of non-standard automobile insurance in 12 states and is licensed as an insurer in 13 additional states. The insurance is made available to individuals categorized as “non-standard” due to payment history, payment preference, driving record, etc. The stock rose 31% over the last year and closed at $3.14 on July 7. The current P/E ratio is 4.71, while the P/S ratio is 0.47.
In 2014, the company reported net income of $28.1 million, a significant increase from the $9.2 million the year before.
EBITDA per share has also increased each year since 2011, recording at $0.32 in 2014.
Biota Pharmaceuticals (BOTA, Financial)
Jim Simons (Trades, Portfolio) owns 565,262 shares in Biota Pharmaceuticals as of the first quarter, or 1.61% of shares outstanding. The most recent insider buy was from director Anne Vanlent, who purchased 35,000 shares on June 22. Director James Fox purchased a total of 140,000 shares on June 9 and 10, while CEO Joseph Patti bought 20,000 shares on March 27. In addition, Biota is buying back shares at a rate of 11%.
Biota develops direct-acting antivirals to treat infections. It currently has four product candidates to treat human rhinovirus, HPV, respiratory syncytial virus infections, and influenza. The stock price dropped 33% in the last year, closing at $2.09 on July 7.
The two drugs that have reached the marketing stage are Relenza and Inavir, both of which are used to treat influenza.
Last year, Biota reported net loss of $11 million, an increase from the net loss of $8.7 million the year before.
EBITDA per share has also declined 10% over the past five years, recording at $-0.29 in 2014.
Insignia Systems (ISIG, Financial)
Jim Simons (Trades, Portfolio) holds 551,500 shares of Insignia, or 4.52% of shares outstanding. Air T Inc., which is a 10% owner of the company, has been purchasing shares on numerous occasions throughout the year. The transactions can be found on Insignia’s insider page. The rate of share buybacks is 10.7%.
Insignia markets in-store advertising products to retailers and consumer packaged goods manufacturers. The stock declined 17% and closed at $2.58 on July 8. The P/E ratio is 151.76, while the P/S ratio is 1.24.
Net income in 2014 was $210,000, down from $1.38 million the year before. The income trend can be seen in the graph below.
However, free cash flow declined to $-2.62 million, down from $3.71 million the year before.
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