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Planets Lined Up For The Triple-Buy Stocks: Gilead Sciences, Everest Re, MettlerToledo International, Corrections Corp. of America, Allied World Assurance, Patriot Coal

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So it is not true that all the planets are going to line up in 2012 and even if they do, they probably will not cause violent earthquake and volcano eruptions here on earth. Planets are planets and earth is earth, for the planets to do magic on the earth, they have to be a lot closer to the earth.

The movie 2012 is simply Hollywood fiction. It wouldn’t happen, keep on investing and plan for your retirement long after that.

The analogy event in stock investing is when Investment Gurus, company insiders, and the company itself are all buying the company’s stocks. The stock may still not erupt like a volcano, but since it happens to quite a few stocks, they form a hot bed for volcanic performance for your portfolio.

GuruFocus tracks about 70 of the nation’s best money managers (“Investment Gurus”) – their portfolio movements and investment insights at the time. Typically these Gurus have a long-term track record that makes the rest of us only envy. Our emphasis has been on the Ben Graham-inspired value investors who tend to buy and hold. There investors include 105-year old Irving Khan who served as Ben Graham’s teaching assistant, and Warren Buffett who learned his ropes of investing from Ben Graham. We also feature guys like John Paulson who ascended to that status of Buffett and George Soros in the recent financial crisis from a relatively unknown hedge fund manager. Of course, George Soros is one of the Gurus we follow too, although we also have doubts how much we can learn from his fast-changing portfolio. Some of the Gurus are relatively young and already have impressive track records, such as David Einhorn and Daniel Loeb, who are in their 40’s. Purchasing by these Gurus carries intelligence of investment worthiness in our opinion.

Company insiders have the advantage of inside information. There are laws governing them so they will not taking advantage of such information at the expenses of the investors who do not know any better, but insiders can buy and sell stocks legally. When they make an open-market buy or sale, GuruFocus dutifully reports to our viewers. Typically, there could be many reasons that company insiders sell their shares, but when they buy, it means one thing – they think the company’s stock will go higher.

When company spends their hard-earned cash on buying back shares, it means the company’s board of directors collectively thinks the stock is low. There are a number of other things a company can spend money on, such as plowing the money into the business and making the company bigger, distributing the money to the investors so they can invest elsewhere, paying down the debt, or doing nothing and simply watching the cash piles up. Given all the choices, if the smart people of the board put the head together and decide buying back the stocks is the best thing to do, there is a good chance that the company’s stock is indeed cheap as compared to its intrinsic value.

Finding stocks that have been purchased by all three kinds of investors is like locating a star system that has all its planets lined up. That is, if you are not a Premium Members of GuruFocus. Once you signed up and became a premium member, the list of so-called “triple-buy” stocks is just one click away.

Here are few examples:

SymbolNumber of Guru BuysNumber of Insiders BuysRate of Share Buyback (%)Price ($)Market Cap ($M) ↓P/EYield (%)
GILD111.40%$39.4735603.212.20
RE111.80%$77.824616.18.22.5
MTD112.20%$120.484064.520.90
CXW115.80%$20.762407.8160
AWH118.50%$452270.65.11.8
PCX122.80%$19.041730.325.70


A Brief Review

Gilead Sciences Inc. (GILD)

Gilead Sciences, Inc. is an independent biopharmaceutical company that seeks to provide accelerated solutions for patients and the people who care for them. Gilead Sciences Inc. has a market cap of $35.6 billion; its shares were traded at around $39.47 with a P/E ratio of 12.2 and P/S ratio of 5.

George Soros owns 58,200 shares as of 12/31/2009, an increase of 854.1% from the previous quarter.

Director Olsen Per Wold bought 12,800 shares of GILD stock on 05/04/2010 at the average price of 38.6, the price of the stock has increased by 2.25% since.

Everest Re Group Ltd. (RE)

Everest Re Group, Ltd. is a world leader in property and casualty reinsurance and insurance, offering innovative products, responsive service and unsurpassed financial strength. Everest Re Group Ltd. has a market cap of $4.62 billion; its shares were traded at around $77.82 with a P/E ratio of 8.2 and P/S ratio of 1. The dividend yield of Everest Re Group Ltd. stocks is 2.5%.

Charles Brandes bought 24,334 shares in the quarter that ended on 03/31/2010, which is 0.01% of the $18.64 billion portfolio of Brandes Investment.

President and COO Jones E Ralph bought 5,000 shares of RE stock on 05/03/2010 at the average price of 76.34, the price of the stock has increased by 1.94% since.

MettlerToledo International Inc. (MTD)

Mettler-Toledo is the world's largest manufacturer and marketer of weighing nstruments for use in laboratory, industrial and food retailing applications. Mettlertoledo International Inc. has a market cap of $4.06 billion; its shares were traded at around $120.48 with a P/E ratio of 20.9 and P/S ratio of 2.3. Mettlertoledo International Inc. had an annual average earning growth of 11.9% over the past 10 years. GuruFocus rated Mettlertoledo International Inc. the business predictability rank of 2-star.

Chuck Royce bought 40,000 shares in the quarter ended on March 31, 2010.

President and CEO Oliver A Filliol bought 2,549 shares of MTD stock on 03/12/2010 at the average price of 106.09, the price of the stock has increased by 13.56% since.

Corrections Corp. of America New (CXW)

Corrections Corporation of America Company is the one of nation's largest providers of detention and corrections services to governmental agencies. Corrections Corp. Of America New has a market cap of $2.41 billion; its shares were traded at around $20.76 with a P/E ratio of 16 and P/S ratio of 1.4. Corrections Corp. Of America New had an annual average earning growth of 6.7% over the past 10 years.

Bill Ackman owns 10,936,672 shares as of 12/31/2009, an increase of 48.68% from the previous quarter. This position accounts for 19% of the $1.41 billion portfolio of Pershing Square Capital Management, L.P..

Director Dennis Deconcini bought 1,000 shares of CXW stock on 03/03/2010 at the average price of 20.74, the price of the stock has increased by 0.1% since.

Allied World Assurance Company Holdings (AWH)

Allied World Assurance Company Holdings, Ltd, is one of Bermuda's property and casualty insurers. Allied World Assurance Company Holdings has a market cap of $2.27 billion; its shares were traded at around $45 with a P/E ratio of 5.1 and P/S ratio of 1.3. The dividend yield of Allied World Assurance Company Holdings stocks is 1.8%.

David Dreman owns 608,698 shares as of 12/31/2009, an increase of 11.03% from the previous quarter. This position accounts for 0.69% of the $4.06 billion portfolio of Dreman Value Management.

EVP & C.I.O., Newmarket Admin John J Gauthier bought 1,000 shares of AWH stock on 05/13/2010 at the average price of 45.3, the price of the stock has decreased by 0.66% since.

Patriot Coal Corp. (PCX)

PATRIOT COAL CORPORATION is a producer and marketer of coal in the Eastern United States, with eight company-operated mines, two joint venture mines and numerous contractor-operated mines in Appalachia and the Illinois Basin. Patriot Coal Corp. has a market cap of $1.73 billion; its shares were traded at around $19.04 with a P/E ratio of 25.7 and P/S ratio of 0.8.

Kenneth Fisher bought 36,300 shares in the quarter that ended on 03/31/2010, which is less than 0.01% of the $33.01 billion portfolio of Fisher Asset Management, LLC.

Director Robert O Viets bought 575 shares of PCX stock on 05/03/2010 at the average price of 19.31, the price of the stock has decreased by 1.4% since.

Get the complete list of triple-buy stocks. As a warning, not all planets are exactly lined up for each stock. Some of the stocks have just a few insider sales too.

GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett, company insiders, and company buy backs for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.


Rating: 3.6/5 (7 votes)

Comments

fekafiemd
Fekafiemd premium member - 4 years ago
great article.

we need more like this.

out of all the stocks, gild has the best financials and valuation.

munger
Munger - 4 years ago
I don't put much weight in director purchases

Please leave your comment:


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